In 60 neonates (gestational age, 26.5-40 weeks; postnatal age, 1-14 days) and in 11 infants (gestational age, 26-33 weeks; postnatal age, 4.5-38 weeks), the accuracy of two wavelength pulse oximetry was examined. A total of 112 comparisons between transcutaneous pulse oximetry saturation (StcO2, NELLCOR N-100) and arterial oxygen saturation (SaO2, OSM2 RADIOMETER) were obtained. SaO2 ranged from 80 to 100%. Criteria for comparison between StcO2 and SaO2 were standardized: patients in behavioral state 1, StcO2 stable for 2 min, and arterial samples drawn from an indwelling arterial line. StcO2 was significantly related to SaO2 (P less than 0.01), but the difference, StcO2 - SaO2, significantly increased when SaO2 decreased [StcO2 - SaO2(%) = -0.39 SaO2(%) + 37.95; r = -0.64, P less than 0.01]. No significant relationship was found between StcO2 - SaO2 and either bilirubinemia (range, 5-222 mumol/L) or fetal hemoglobin (HbF) (range, 12-95%). We conclude that StcO2 overestimates SaO2 when SaO2 decreases, and this overestimation is not due to high levels of bilirubin or HbF.