Arterial oxygenation, breathing pattern, and electroencephalogram were studied during sleep in patients with chronic bronchitis and emphysema and in healthy subjects. All of the 10 "blue and bloated" patients had episodes of transient hypoxaemia lasting 1--100 min, when their oxygen saturation fell by more than 10%, whereas such desaturation did not occur in 2 "pink and puffing" patients or in 4 healthy subjects. Hypoxaemic episodes usually occurred during the rapid-eye-movement stage of sleep. It is suggested that these hypoxaemic episodes result from a combination of hypoventilation and impaired ventilation/perfusion relationships and that these episodes may contribute to the development of the pulmonary hypertension and secondary polycythaemia which characterises "blue and bloated" patients.