To analyze the gas exchange mechanisms in the chorioallantois, PO2 and PCO2 were measured in air cell gas, in the allantoic artery and in the allantoic vein in chicken embryos on the 16th day of incubation. In addition, the O2 dissociation curve of blood, and O2 uptake and CO2 output of the embryo were determined. From O2 measurements performed in hypoxia (FIO2=0.14), normoxia and hyperoxia (FIO2=0.67), it was concluded that there was a sizable functional arterio-venous shunt amounting to 10-15% of the total chorioallantoic blood flow and that the diffusing capacity of the air cell-blood barrier for O2 was about 7 microliter . min-1. Torr-1. The CO2 measurements are in agreement with the model. In hypoxia, the air cell-blood transfer of O2 was markedly diffusion limited. The diffusion limitation effect was slight in normoxia, and not detectable in hyperoxia. At all oxygenation levels the effect of the shunt on blood arterialization was marked, particularly so in hyperoxia where the air cell-arterialized blood PO2 difference averaged 180 Torr.