Research from the past 15 to 20 years has led to a comprehensive understanding of the etiology and effects of polycythemia and hyperviscosity in the newborn. Polycythemia and hyperviscosity are generally a result of a poor intrauterine environment or hypoxic complications during labor and delivery. Changes in blood viscosity are a direct result of changes in hematocrit because the plasma viscosity in the newborn is virtually always normal. Polycythemia and hyperviscosity are associated with decreases in blood flow to the brain, heart, lung, intestines, and carcass. Renal blood flow is not affected, but renal plasma flow is diminished, resulting in a lower glomerular filtration rate (GFR). The elevated hemoglobin and hematocrit are associated with an increase in the arterial oxygen content. It is the increase in arterial oxygen content, not the hyperviscosity, that is directly responsible for the decreased blood flow in the brain and heart as well as cardiac output. As a result, brain and cardiac oxygenation is normal. Decreased pulmonary blood flow appears to be the result of hyperviscosity and can result in system hypoxia. This can be corrected by a partial exchange transfusion to lower the hematocrit and viscosity. This will also improve renal function by increasing plasma flow. Because the abnormalities in brain function are due to a primary hypoxia event and not reduced cerebral blood flow, a partial exchange transfusion will not improve short-term or long-term abnormalities in neurological functioning.