Lung function studies were made on a total of 173 patients before and after elective surgery. Functional residual capacity was reduced postoperatively and this reduction was most severe in those patients who underwent an upper abdominal operation. In this group, the postoperative reduction in functional residual capacity was related to the concomitant increase in alveolar/arterial Po2 difference. Studies of the distribution of ventilation showed that the alveolar/arterial Po2 difference was related to the amount of closure of small airways. The increase in alveolar/arterial Po2 difference following upper abdominal surgery was associated with an alteration in the relationship of functional residual capacity to the volume at which small airways close.