To develop an algorithm for the spectrophotometric determination of the oxygen saturation in blood, a model for the transmission of light in a scattering and absorbing medium is developed, taking into account effects of multiple scattering. The computed results obtained by a Monte Carlo simulating program agreed well with those found by experiment. The results were compared with those obtained by the commonly used algorithm of transmission oximetry (based on Lambert-Beer's law) and it was found that the calibration curves obtained by this method were strongly dependent on the haematocrit and thickness of the sample. These curves were less reliable the lower the saturation of oxygen.