Atelectasis is an important cause of impaired gas exchange during general anaesthesia; it causes pulmonary shunting. We studied the effects of gas composition on the formation of atelectasis and on gas exchange during the induction of general anaesthesia. In 12 adult patients, the lungs were ventilated with 30% oxygen in nitrogen during anaesthesia induction, and in another 12, a conventional technique was used (100% oxygen during induction and 40% oxygen in nitrogen thereafter). Extent of atelectasis was estimated by computed tomography and the ventilation-perfusion relation (VA/Q) by the multiple inert gas elimination technique. After anaesthesia induction, there was little atelectasis in the 30% oxygen group (mean 0.2 [SD 0.4] cm2) and a significantly greater amount (4.2 [5-6] cm2; p < 0.001) in the 100% oxygen group. Patients in the 30% oxygen group were observed for another 40 min. 6 continued to receive 30% oxygen (subgroup A) and 6 were ventilated with 100% oxygen (subgroup B). During this time, the amount of atelectasis increased to 1.6 (1.6) cm2 in subgroup A and to 4.7 (4.5) cm2 in subgroup B (p = 0.047 for difference between groups). In subgroup A, the shunt (VA/Q < 0.005) increased from 1.6 (2.0)% of cardiac output to 3.2 (2.7)%, but the arterial oxygen tension did not change. In subgroup B, the shunt increased from 2.6 (5.2)% to 9.8 (5.7)% of cardiac output. These results suggest that the composition of inspired gas is important in atelectasis formation during general anaesthesia. Use of a lower oxygen concentration than is now standard practice might prevent the early formation of atelectasis.