Chronic obstructive pulmonary disease (COPD) is a leading cause of death and disability internationally. Alveolar hypoxia and consequent hypoxemia increase in prevalence as disease severity increases. Ventilation/perfusion mismatch resulting from progressive airflow limitation and emphysema is the key driver of this hypoxia, which may be exacerbated by sleep and exercise. Uncorrected chronic hypoxemia is associated with the development of adverse sequelae of COPD, including pulmonary hypertension, secondary polycythemia, systemic inflammation, and skeletal muscle dysfunction. A combination of these factors leads to diminished quality of life, reduced exercise tolerance, increased risk of cardiovascular morbidity, and greater risk of death. Concomitant sleep-disordered breathing may place a small but significant subset of COPD patients at increased risk of these complications. Long-term oxygen therapy has been shown to improve pulmonary hemodynamics, reduce erythrocytosis, and improve survival in selected patients with severe hypoxemic respiratory failure. However, the optimal treatment for patients with exertional oxyhemoglobin desaturation, isolated nocturnal hypoxemia, or mild-to-moderate resting daytime hypoxemia remains uncertain.