Pulmonary arteriovenous malformations (AVM) lead to chronic hypoxemia and systemic emboli. These lesions can now be treated by catheter embolization. In order to examine physiologic abnormalities during exercise in AVM patients, and to evaluate functional improvement after therapeutic embolization, eight patients underwent detailed physiologic studies at rest and during exercise before and after therapeutic embolization. Before treatment, six patients noted dyspnea on exertion and three had symptoms suggesting paradoxical embolism. Resting studies showed hypoxemia, abnormally increased shunt fractions, chronic alveolar hyperventilation, mild decreases in diffusing capacity, and abnormal wasted ventilation (VD). During exercise, oxygenation changed little from the resting values but VD increased markedly. Functional impairment was observed in most patients, and was correlated with shunt fraction. Obliteration of the AVM was accomplished by therapeutic embolization with placement of coils or balloons in the feeder vessels. This treatment resulted in immediate relief of dyspnea and improvement in resting PaO2 and shunt fraction. Exercise studies after embolization showed improvement in exercise capacity and gas exchange. However, chronic alveolar hyperventilation and reduced diffusing capacity remained unchanged. In summary, therapeutic embolization effectively reduces the degree of shunting, with improvement in respiratory symptoms, exercise capacity, and gas exchange at rest and during exercise. The abnormally decreased diffusing capacity and increased VD suggest the presence of a diffuse pulmonary vascular abnormality, of which further study is warranted.