We have examined the effect of the fractional concentration of nitrogen (FI(N2)) on the decrease in lung volumes which occurs during restricted breathing with oxygen-nitrogen mixtures. Conscious human subjects breathed one of five gas mixtures of oxygen and nitrogen for 15 min on each of five occasions. For the final 5 min of each 15-min period, functional residual capacity (FRC) was reduced by one tidal volume, by external pressurization. After return to normal breathing, the subjects showed a statistically significant decrease in FRC and residual volume (RV), which became larger as FI(O2) increased from 30% to 100%. This reduction in lung volumes was resistant to early reexpansion. The maximum decrease in both FRC and RV was found with 100% oxygen, and was 10% of the control lung volumes. The use of a mixture of 75% nitrogen and 25% oxygen prevented this decrease in lung volumes. Nitrogen 50% reduced the decrease in FRC, but did not affect the decrease in RV. The difference in effect on lung volumes between FI(O2) 25% and 30% was statistically significant, indicating a watershed area for FI(N2) between 70% and 75%.