Exercise-induced arterial hypoxemia (EIAH) at or near sea level is now recognized to occur in a significant number of fit, healthy subjects of both genders and of varying ages. Our review aims to define EIAH and to critically analyze what we currently understand, and do not understand, about its underlying mechanisms and its consequences to exercise performance. Based on the effects on maximal O(2) uptake of preventing EIAH, we suggest that mild EIAH be defined as an arterial O(2) saturation of 93-95% (or 3-4% <rest), moderate EIAH as 88-93%, and severe EIAH as <88%. Both an excessive alveolar-to-arterial PO(2) difference (A-a DO(2)) (>25-30 Torr) and inadequate compensatory hyperventilation (arterial PCO(2) >35 Torr) commonly contribute to EIAH, as do acid- and temperature-induced shifts in O(2) dissociation at any given arterial PO(2). In turn, expiratory flow limitation presents a significant mechanical constraint to exercise hyperpnea, whereas ventilation-perfusion ratio maldistribution and diffusion limitation contribute about equally to the excessive A-a DO(2). Exactly how diffusion limitation is incurred or how ventilation-perfusion ratio becomes maldistributed with heavy exercise remains unknown and controversial. Hypotheses linked to extravascular lung water accumulation or inflammatory changes in the "silent" zone of the lung's peripheral airways are in the early stages of exploration. Indirect evidence suggests that an inadequate hyperventilatory response is attributable to feedback inhibition triggered by mechanical constraints and/or reduced sensitivity to existing stimuli; but these mechanisms cannot be verified without a sensitive measure of central neural respiratory motor output. Finally, EIAH has detrimental effects on maximal O(2) uptake, but we have not yet determined the cause or even precisely identified which organ system, involved directly or indirectly with O(2) transport to muscle, is responsible for this limitation.