Premature infants, particularly those with a birthweight of less than 1.0 kilograms and respiratory disease, frequently require red blood cell (RBC) transfusions. The major mechanisms causing the anemia of prematurity are phlebotomy blood losses and a diminished ability to mount an effective erythropoietin response to the falling RBC mass. Although the indications for RBC transfusions have not been defined by controlled clinical trials, usual transfusion practices are discussed. In addition, the potential role for recombinant erythropoietin in the treatment of anemia of prematurity is analyzed critically. Finally, an overall approach to managing the anemia of prematurity is provided.