Tidal airway closure occurs when the closing volume exceeds the end-expiratory lung volume, and it is commonly observed in general anaesthesia, particularly in obese patients. Animal studies suggest that tidal airway closure causes injury to peripheral airways, characterized histologically by rupture of alveolar-airway attachments, denuded epithelium, disruption of airway smooth muscle and increased numbers of polymorphonuclear leucocytes in the alveolar walls. Functionally, this injury is characterized by increased airway resistance. Peripheral airway injury may be a common yet unrecognized complication and may be avoided by application of low levels of positive end-expiratory pressure. Measurement of exhaled nitric oxide is a simple method that may permit early detection of unsuspected peripheral airway injury during mechanical ventilation, both in healthy and diseased lungs.