Anaesthesia causes a respiratory impairment, whether the patient is breathing spontaneously or is ventilated mechanically. This impairment impedes the matching of alveolar ventilation and perfusion and thus the oxygenation of arterial blood. A triggering factor is loss of muscle tone that causes a fall in the resting lung volume, functional residual capacity. This fall promotes airway closure and gas adsorption, leading eventually to alveolar collapse, that is, atelectasis. The higher the oxygen concentration, the faster will the gas be adsorbed and the aleveoli collapse. Preoxygenation is a major cause of atelectasis and continuing use of high oxygen concentration maintains or increases the lung collapse, that typically is 10% or more of the lung tissue. It can exceed 25% to 40%. Perfusion of the atelectasis causes shunt and cyclic airway closure causes regions with low ventilation/perfusion ratios, that add to impaired oxygenation. Ventilation with positive end-expiratory pressure reduces the atelectasis but oxygenation need not improve, because of shift of blood flow down the lung to any remaining atelectatic tissue. Inflation of the lung to an airway pressure of 40 cmH2O recruits almost all collapsed lung and the lung remains open if ventilation is with moderate oxygen concentration (< 40%) but recollapses within a few minutes if ventilation is with 100% oxygen. Severe obesity increases the lung collapse and obstructive lung disease and one-lung anesthesia increase the mismatch of ventilation and perfusion. CO2 pneumoperitoneum increases atelectasis formation but not shunt, likely explained by enhanced hypoxic pulmonary vasoconstriction by CO2. Atelectasis may persist in the postoperative period and contribute to pneumonia.