We measured lung mechanics in seven healthy males during acute isocapnic hypoxia (PAO2 = 40–50 Torr; PACO2 = 38–42 Torr). Hypoxia was accompanied by increases in total lung capacity (mean increase +/- SD; 0.40 +/- 0.24 liters; P less than 0.005) functional residual capacity (0.34 +/- 0.25 liters; P less than 0.01) and residual volume (0.56 +/- 0.44 liters; P less than 0.02) in all subjects. Specific conductance of the lung decreased during hypoxia (P less than 0.02). The static deflation pressure-volume curve of the lung was shifted upward during hypoxia in all subjects. Resting end-expiratory recoil pressure of the lung was slightly, but not significantly lower during hypoxtic expiratory lung compliance was greater during hypoxia (0.39 +/- 0.04 l/cmH2O) than control measurements (0.31 +/- 0.05 l/cmH2O; P less than 0.005). No change was noted in dynamic lung compliance. All changes in lung mechanics were reversed within three minutes of reoxygenation. We conclude that acute isocapnic hypoxia increases total lung capacity in man and suggest that this may be due to the effect of hypoxia on the airways and pulmonary circulation.