OBJECTIVE The objective of this study was to determine the rate of compliance with hospital guidelines for alarm limits for pulse oximetry in preterm infants on oxygen therapy. METHODS All infants admitted to the nurseries at the Royal Women's Hospital, Melbourne, Australia, with gestational age <32 weeks or birth weight <1500 g between August 2005 and February 2006 were eligible for inclusion. Data on the alarm limits set for infants on oxygen therapy were collected prospectively. The target saturation range recommended in written hospital guidelines was 88% to 92%, with alarm limits set at 85% and 94%. RESULTS Data were prospectively collected for 144 subjects with mean (SD) gestational age 29.3 (2.4) weeks and birth weight 1226 (354) g; 1073 alarm limits were collected when infants were on oxygen. The lower alarm limit was set correctly 91.1% of the time. In contrast, the upper alarm limit was set correctly only 23.3% of the time: 76.5% of the time it was too high, and 23.8% of the time it was set at 100%. Infants with an upper alarm limit set correctly on a particular day had a significantly lower birth weight, gestational age, postmenstrual age, and postnatal age than infants who had the upper alarm limit set too high. Use of assisted ventilation, higher inspired oxygen concentrations, and more frequent changes in inspired oxygen concentration were all associated with improved odds of having an appropriately set upper alarm limit. CONCLUSIONS This study suggests that current guidelines regarding the upper pulse oximeter alarm limit for infants receiving oxygen might be commonly exceeded, although compliance might be better for infants at higher risk of adverse outcomes. However, there might be less variation from guidelines for the lower alarm limit.