Polycythemia is one of the key factors involved in the chronic mountain sickness syndrome, a condition frequent in Andean natives but whose causes still remain unclear. In theory, polycythemia may be secondary to abnormalities in ventilation, occurring during day or night (e.g. due to sleep abnormalities) stimulating excessive erythropoietin (Epo) production, or else it may result from either autogenous production, or from co-factors like cobalt. To assess the importance of these points, we studied subjects with or without polycythemia, born and living in Cerro de Pasco (Peru, 4330m asl, CP) and evaluated the relationship between Epo and respiratory variables both in CP and sea level. We also assessed the relationship between sleep abnormalities and the circadian rhythm of Epo. Polycythemic subjects showed higher Epo in all conditions, lower SaO2 and hypoxic ventilatory response, higher physiological dead space and higher CO2, suggesting ventilatory inefficiency. Epo levels could be highly modified by the level of oxygenation, and were related to similar directional changes in SaO2. Cobalt levels were normal in all subjects and correlated poorly with hematologic variables. The diurnal variations in Epo were grossly abnormal in polycythemic subjects, with complete loss of the circadian rhythm. These abnormalities correlated with the levels of hypoxemia during the night, but not with sleep abnormalities, which were only minor even in polycythemic subjects. The increased Epo production is mainly related to a greater ventilatory inefficiency, and not to altered sensitivity to hypoxia, cobalt or sleep abnormalities. Improving oxygenation can represent a possible therapeutic option for this syndrome.