The relationship between cellular metabolism and tissue O2 tension was investigated using the isolated perfused rat lung. Lungs were ventilated with gas mixtures of varying PO2 under conditions of no net gas exchange so that alveolar and lung parenchymal gas tensions were in approximate equilibrium. When alveolar PO2 was reduced to 0.7 mmHg, there were significant increases in lung lactate production and perfusate lactate/pyruvate, and decreases in lung tissue ATP content and ATP/ADP. Metabolic parameters were unchanged by alveolar hypoxia when alveolar PO2 was 7 mmHg or greater. Changes of complete anoxia required a PO2 less than 0.04 mmHg. To determine competition between O2 and CO in lung metabolism, alveolar O2 was maintained at 5% and CO was varied from 0 to 90%. Significant changes in production of lactate and pyruvate and tissue ATP content occurred with an alveolar CO of 75% (CO/O2 = 15) but not with CO concentrations of 50%, (CO/O2 = 10) or less. These results with an intact organ confirm previous data with subcellular systems showing a high affinity of the mitochondrial respiratory chain for O2, and indicate that the metabolic changes of hypoxia do not occur until intracellular PO2 approaches 1 mmHg or the CO/O2 exceeds 10.