Chronic obstructive pulmonary disease (COPD) is the fourth leading cause of death, affecting 14 million adults in the United States. Symptoms related to sleep disturbances are common in moderate to severe COPD, particularly in elderly patients, in the form of morning tiredness and early awakenings. One major cause of morbidity in this population is abnormalities in gas exchange and resultant hypoxemia. Sleep has profound adverse effects on respiration and gas exchange in patients with COPD. There are several mechanisms underlying nonapneic oxygen desaturation during sleep. They include decreased functional residual capacity, diminished ventilatory responses to hypoxia and hypercapnia, impaired respiratory mechanical effectiveness, diminished arousal responses, respiratory muscle fatigue, diminished nonchemical respiratory drive, increased upper airway resistance, and the position of baseline saturation values on the oxyhemoglobin dissociation curve. Smoking cessation, bronchodilation, and pulmonary rehabilitation are cornerstones of treatment of COPD. Improvement in lung mechanics and gas exchange should lead to better sleep quality and health status.