Impaired arterial oxygenation, ranging from an increased alveolar-arterial oxygen gradient to severe hypoxaemia, is commonly reported in patients with advanced liver disease. Hepatopulmonary syndrome is defined by the clinical triad of liver disease, alveolar-arterial oxygen gradient of >15 mmHg, evidence of intrapulmonary vascular dilatations. Three methods are available for detecting intrapulmonary vascular dilatations: contrast-enhanced echocardiography, technetium 99m-labelled macroaggregated albumin scanning and pulmonary arteriography. A recent hypothesis that assigns to nitric oxide the crucial role as mediator of abnormal pulmonary vasodilatation and oxygen is discussed; the measurement of nitric oxide in the exhaled air may represent a possible marker of gas exchange abnormalities in liver disease. The therapeutic options to relieve the hepatopulmonary syndrome are discussed. While no pharmacological treatment has proved to be clinically useful, liver transplantation was reported to cure the response to transplantation is discussed. The response of hypoxaemia to 100% oxygen breathing appears to be the most important prognostic factor of perioperative death rate.