The hemodynamic effects of prolonged mechanical ventilation with positive end-expiratory pressure (PEEP), with and without blood volume augmentation, were studied in 18 beagles anesthetized with halothane (0.7 per cent end-tidal). Addition of 12 cm H2O PEEP during mechanical ventilation in normavolemic dogs was associated with reductions of transmural cardiac filling pressures, cardiac index and stroke index to 50 per cent of control values. Circulatory adaptation did not occur. Filling pressures and flow remained unchanged during the ensuing 8 hours when PEEP was maintained. They returned to control levels when PEEP was discontinued, except for the transmural right ventricular end-diastolic pressure, which remained elevated above control levels. Systemic vascular resistance was unchanged, but pulmonary vascular resistance doubled upon addition of PEEP. Following autologous whole blood transfusion (25 ml/kg) during mechanical ventilation with PEEP, cardiac index returned to, and remained at, control levels. After PEEP was discontinued, cardiac index increased acutely and remained elevated for the remainder of the study period (as long as 7 hours). Comparable transfusion during mechanical ventilation without PEEP elevated cardiac index only transiently. Right atrial, pulmonary capillary wedge, and right and left ventricular end-diastolic pressures showed marked increases relative to atmospheric with PEEP and after transfusion. Calculated transmural pressures demonstrated clear reductions with application of PEEP, followed by increases to control levels with transfusion and further increases to above control when PEEP was discontinued. Study of ventricular function curves revealed that changes in filling pressures and not to changes in ventricular contractility. Transmural pulmonary arterial diastolic pressure rose throughout the 12 hours of study, despite return of pulmonary vascular resistance to control level with removal of PEEP. Thus, acute decreases in cardiac filling pressure, cardiac index, and stroke index persist consequent to application of PEEP, and circulatory adaptation does not occur. The apparent hemodynamic deterioration may be reversed by blood volume augmentation, but when PEEP is discontinued, hypervolemia with consequent increases in filling pressures and a move along a ventricular function curve will occur. Changes in cardiac index will depend upon the overall state of right and left ventricular contractility.