Partial liquid ventilation (PLV) has been shown to be an effective means of improving oxygenation in the injured lung. However, little is known about how approach to ventilation during PLV affects gas exchange and pulmonary mechanics. We hypothesized that gas exchange and pulmonary mechanics would be best with positive end-expiratory pressure (PEEP) set above the lower inflection point (LIP) of the pressure-volume (P-V) curve regardless of mode of ventilation or inspiratory to expiratory time (I:E) ratio and that the efficiency of ventilation would be greatest with volume-controlled ventilation (VCV) compared with pressure-controlled ventilation (PCV) and with long inspiratory time as compared with short inspiratory time. Lung injury was induced in 14 sheep by lavage, 10 of which were studied. Sheep were then assigned to high-PEEP (Group H, n = 5) and low-PEEP (Group L, n = 5) groups. In Group H applied PEEP was set at the LIP and in Group L applied PEEP was set at 5 cm H2O after the lung was filled with perflubron (PFB). We randomly compared VCV and PCV with I:E ratios of 1:2, 1:1, and 2:1. Peak inspiratory pressure and VT were adjusted to maintain a constant end-inspiratory plateau pressure (Pplat) of about 25 cm H2O in both groups and a constant total PEEP of about 5 cm H2O in Group L and about 12 cm H2O in Group H. There were no differences in oxygenation among modes in Group H. In Group L VCV 2:1 and all of the PCV modes in Group L had a lower PaO2 than VCV 1:1 (p < 0.05). PaCO2 and VD/VT were significantly different (p < 0.05) among modes. VD/VT was highest during PCV 1:2 with PEEP of 5 cm H2O (p < 0.05). Quasi-static compliance in Group H was higher than in Group L (p < 0.05). We conclude that during low PEEP gas exchange deteriorated in VCV with long inspiratory time and in PCV. Oxygenation was enhanced during VCV 1:1 when compared with VCV at longer I:E ratios or PCV at any I:E ratio. With PEEP set at the LIP, adequate gas exchange and improved lung mechanics could be obtained in all modes assessed.