The pulse oximeter estimates arterial hemoglobin saturation by measuring the light absorbance of pulsating vascular tissue at two wavelengths. The relationship between measured light absorbances and saturation was developed empirically and is built into the oximeter software. Studies in human volunteers have shown good performance of the device in healthy adults for saturations in the range of 70 to 100%. Studies in the operating room and intensive care unit have established its clinical accuracy and usefulness. The pulse oximeter has already found a number of clinical applications outside of the operating room, such as monitoring during patient transport, respiratory monitoring during narcotic administration, and evaluation of home-oxygen therapy. To use this monitor to its full potential, we must be aware of its limitations as well as its advantages. Because of the nature of the HbO2 dissociation curve, saturation measurements will not be sensitive to changes in PaO2 when the PaO2 is greater than 100 torr. This also implies that the pulse oximeter may fail to detect an inadvertent endobronchial intubation in the operating room. It may take minutes to detect an esophageal intubation in a well-preoxygenated patient. When desaturation does occur, the pulse oximeter detects it quickly, accurately, and reliably. Since the pulse oximeter uses two wavelengths of light, it cannot distinguish more than two hemoglobin species. Thus, COHb and MetHb will cause errors in SpO2 if present in large amounts. Intravenously administered dyes can also cause errors because of their absorbance properties, particularly methylene blue and indocyanine green. The pulse oximeter may be unable to detect an adequate signal during abnormal hemodynamic conditions. The pulse oximeter is one of the most important advances in noninvasive monitoring because it provides a means of continuously and quickly assessing arterial blood oxygenation. It is easy to use and interpret, requires little setup time, and poses no additional risks to the patient. Pulse oximetry may soon be a standard of practice for routine monitoring in any clinical setting in which the patient is at risk of hypoxemia.