INTRODUCTION Interpreting measurements of carbon monoxide can be problematic. STATE OF THE ART The transfer factor (TLCO) is usually calculated by multiplying the decrease in alveolar CO concentration between the beginning and the end of a 10 second breath hold (KCO) by the alveolar volume (VA). Thus a reduced TLCO may occur due to either a low KCO, a reduced VA, or a combination of both. PERSPECTIVES A careful examination of KCO and VA will usually suggest a specific explanation for a reduction in TLCO. In restrictive lung diseases from extrapulmonary origin, TLCO is low but TLCO/VA [[/INF 120% of the reference values. In interstitial lung disease, the value of TLCO/VA depends on whether the loss of lung units is diffuse or not, and probably also on the status of the microcirculation. In airflow obstruction, a low VA is caused by uneven distribution of inspired He/CO mixture within the breath-hold time. CONCLUSIONS The transfer factor for carbon monoxide is best interpreted in terms of its components, alveolar volume and carbon monoxide transfer coefficient.