The mechanism of hypoxaemia can be either due to alveolar ventilation/pulmonary perfusion mismatch, right to left shunt, impaired diffusion of gases in the alveolocapillary membrane, hypoventilation, and decreased inspired oxygen. Low Sp02 for a duration of > 2 weeks, in otherwise clinically stable patient, may suggest chronic hypoxaemia; they may require long term oxygen therapy. In children with chronic hypoxaemia/oxygen-dependent, it is important to understand possible mechanisms and find underlying cause to guide on further management. The approach to this problem will be discussed.