We measured cardiorespiratory variables and 133xenon washout from a nonperfused lung region (XeW) in six anesthetized/paralyzed dogs, mechanically ventilated with 60% O2 at different positive end-expiratory pressures (PEEP). XeW in this technique represents directly measured acinar gas transfer (3). Measurements were repeated after induction of lung injury by lavaging the lungs 11 to 13 times with 600 ml saline. In control dogs, lung compliance (CL), alveolar ventilation (Valv), and XeW all decreased with increasing PEEP from 0 to 25 cm H2O (p < 0.05), while lung resistance (RL) did not change. After lavage, CL, Valv, and XeW below 15 cm H2O PEEP were all less than control values (p < 0.05), while RL was higher than control values. As PEEP increased from 0 to 20 cm H2O, Valv and XeW increased, but CL did not change; RL decreased only from 0 to 5 cm H2O. At 20 cm H2O PEEP, Valv and CL were not different from control values (p > 0.05), and XeW was higher than control values (p < 0.05). At estimated alveolar volumes above 400 ml, values for XeW before and after lavage were similar. We conclude that, during severe lung injury: (1) increasing PEEP to moderate levels will increase acinar gas transfer but, after a certain lung volume is reached, further increases in PEEP will have effects similar to the healthy condition; (2) overall mechanical properties of the lung do not reflect the responses to PEEP of the lung periphery.