Lung volume reduction surgery (LVRS) for emphysema has been suggested to improve patient lung function and activity. The short-term impact of LVRS on exercise performance was evaluated using maximal and submaximal steady-state exercise testing in 27 patients with severe hypoxemic chronic obstructive pulmonary disease (COPD), along with measurements of patient function, dyspnea, and quality of life. LVRS significantly improved exercise performance, due to ventilatory improvements associated with increased ventilatory reserve, enhanced tidal volume recruitment, and improved alveolar ventilation. Preoperative measurements of ventilatory reserve and dead space ventilation during exercise testing were closely associated with improved exercise performance. Improvements in patient dyspnea, walk distances, and quality of life also occurred following LVRS and were associated with improvements in exercise performance. Surgical mortality from LVRS was low (4%), but short-term all-cause mortality was increased (19%). Short-term mortality was associated with reduced expiratory muscle strength and markedly elevated dead space ventilation. We conclude that LVRS produces significant improvements in exercise performance, dyspnea, and quality of life in selected patients with COPD. Physiologic prediction of patients most likely to survive for an extended period and have significant benefit following LVRS may also be possible.