Six pathophysiologic mechanisms of a reduced single breath CO diffusing capacity are discussed and the usefulness of relating carbon monoxide (CO) uptake to the functioning alveolar volume (DL/VA, specific diffusing capacity) is illustrated for several pulmonary diseases. In patients with emphysema and pulmonary emboli (pulmonary vascular occlusive disease), reduced CO uptake is associated with significantly reduced DL/VA and is compatible with reduction of pulmonary capillary bed. In patients with pulmonary alveolar proteinosis, improvement in CO uptake and DL/VA follows lung lavage and suggests that lung units partially filled with proteinaceous material are responsible for hypoxemia, reduced CO uptake and reduced DL/VA. In most cases of radiation fibrosis, sarcoidosis and miscellaneous interstitial fibrosis, reduced CO uptake is associated with a normal DL/VA and suggests that loss of alveolar units, both capillaries and alveoli, has occurred. New regression equations for DL and DL/VA are established for children and adults. DL/VA is linearly related to height and independent of age and sex, while different predictive equations must be used for DL for the 5 through 17 and 18 through 76 age groups. The new regression equations for DL show better correlation in adults we studied over 50 years of age than previous regression equations which use a constant reduction of 2 to 3 ml CO per minute per mm of mercury for each 10 years of adult aging.