A new system for monitoring the oxygen saturation of blood within brain tissue has been developed for patients recovering from neurosurgery or trauma. The system is based on a two-wavelength oximeter, implemented via an optical fiber probe designed to pass through the lumen of a cranial bolt. The oximeter records the oxygen saturation of blood within a small volume of brain tissue surrounding the probe using the differential absorption of light at each wavelength. The contribution to the absorption and the degree of scatter by the brain tissue, blood and other components is difficult to quantify by analytical methods. A Monte Carlo model was developed to try to predict these contributions and thereby identify those variables which might have a significant influence on the calculation of oxygen saturation from measurements of back-scattered intensity in the brain. The model was validated for whole blood by comparing results from the model with empirical results obtained from samples of blood over a range of saturation values.