A measurement of tissue oxygenation may be a better marker of transfusion need than the Hb concentration. Peripheral fractional oxygen extraction, oxygen consumption, and oxygen delivery were measured noninvasively using near infrared spectroscopy in babies, some of whom were given blood transfusions. The above indicators of oxygenation were measured in 96 preterm babies. The decision to transfuse was based on a standard protocol. Transfusions were not considered necessary for babies in group 1 but were given to those in groups 2 (asymptomatic) and 3 (symptoms attributed to anemia). Hb and Hb fraction F (HbF) were measured in each baby. Oxygenation, Hb, and HbF measurements were made again 12-24 h after transfusion, and red cell volume (RCV) was calculated. Fractional oxygen extraction was significantly higher in symptomatic (0.43 +/- 0.06) but not asymptomatic (0.33 +/- 0.05) babies compared with control subjects (0.35 +/- 0.06). Oxygen consumption and oxygen delivery were similar in the three groups before transfusion. After transfusion the mean fractional oxygen extraction fell significantly in symptomatic but not in asymptomatic babies. There was no significant change in either oxygen consumption or oxygen delivery in symptomatic babies. The asymptomatic group had no change in oxygen extraction or oxygen consumption after transfusion, although oxygen delivery increased significantly. Fractional oxygen extraction correlated with HbF (n = 66, r = 0.49, p < 0.001) and RCV (n = 19, r = -0.48, p = 0.04) and there was a weak correlation with Hb (n = 94, r = -0.21, p = 0.04). Peripheral fractional oxygen extraction monitored noninvasively correlated with variables known to determine oxygen availability to the tissues, namely RCV and HbF, and was higher in babies with symptomatic anemia and decreased after transfusion.