We observed patients with chronic mountain sickness (CMS) in our clinic who developed progressive neurological deterioration (encephalopathy) and we wished to investigate this. We studied nine such CMS patients, and compared them to 21 CMS patients without encephalopathy, and to 15 healthy control subjects without CMS. All 45 subjects lived permanently at 3200-4000 m. Measurements at 2260 m included CMS symptom score, multi-slice CT, perfusion CT, pulse oximetry (SpO2%), and hemoglobin concentration (Hb). One patient had MRI imaging but not CT; 5 had CSF pressure measurements. CMS subjects had lower SpO2, higher Hb, higher brain blood density, lower mean cerebral blood flow (CBF), and significant cerebral circulatory delay compared to controls. The nine CMS subjects with neurological deterioration showed diffuse cerebral edema on imaging and more deranged cerebral hemodynamics. CSF pressure was elevated in those with edema. We conclude that cerebral edema, a previously unrecognized complication, may develop in CMS patients and cause encephalopathy. Contributing factors appear to be exaggerated polycythemia and hypoxemia, and lower and sluggish CBF compared to CMS patients without cerebral edema; but what triggers this complication is unknown. Recognition and treatment of this serious complication will help reduce morbidity and mortality from CMS.