Chronic obstructive pulmonary disease (COPD) is the fourth leading cause of death, affecting 14 millions adults in the United States. Symptoms related to sleep disturbances are common in individuals with moderate to severe COPD, particularly in the elderly, which is commonly manifested as morning fatigue and early awakenings. One major cause of morbidity in this population is abnormalities in gas exchange and resultant hypoxemia as they can lead to elevated pulmonary pressures, dyspnea and in severe cases right ventricular overload and failure. 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 mechanics, diminished arousal, respiratory muscle fatigue, diminished nonchemical respiratory drive, increased upper airway resistance, and the starting point of baseline saturation values while awake on the oxyhemoglobin dissociation curve. Smoking cessation, bronchodilation, inhaled steroids in those with a reversible component and pulmonary rehabilitation are corner stones of treatment of COPD. The goals of therapy for the clinician should be to improve lung mechanics as well as gas exchange ultimately leading to better sleep quality and health status.