The primary objectives of this article are to review the potential role of carbon monoxide (CO) as an endogenous mediator, diagnostic marker for pulmonary disorders, and therapeutic target in critical illness. The review will start by focusing on the importance of the heme oxygenase (HO)-CO axis as an endogenous system as it relates to the cardiovascular and pulmonary systems. It will elucidate the influence of HO gene expression on critical events like shock, sepsis, ischemia-reperfusion and others. Our focus will then shift and look at the potential diagnostic role of exhaled CO in major inflammatory states of the lung, and finally we will highlight the activities on inhaled CO being considered as a possible therapeutic tool and the controversies surrounding it.