Four male potoroos (Potorous tridactylus apicalis) breathed 21% and 7% O2 with and without the addition of 5% CO2. The effects of these gas mixtures on the potoroo's sleeping-waking pattern (SWP) were studied. The SWP while breathing 21% O2/5% CO2 was unchanged when compared with that of breathing ambient air (21% O2). While breathing 7% O2, the SWP was severely disrupted: total sleep time (TST) and slow wave sleep (SWS) increased markedly. Brain temperature fell substantially. Paradoxical sleep (PS) was almost abolished and wakefulness (W) decreased. The addition of 5% CO2 to the O2 deficient gas mixture, i.e., 7% O2/5% CO2, restored the SWP to that obtained while breathing ambient air. It is concluded that CO2 neutralizes the disruptive effect which hypoxia has on the potoroo's SWP. It is hypothesized that this constitutes a homeostatic mechanism for stabilizing the SWP and is carried over from pouch life.