Inherent in any decision to treat a patient for anemia is an appreciation of the underlying cause of a decrease in the oxygen-carrying capacity of blood. Equally important is an understanding of how this acute or chronic decrease in oxygen delivery affects individual patients. Anemia generally results from blood loss, decreased red blood cell (RBC) production, poor RBC maturation, or increased RBC destruction. This article reviews the pathophysiology of anemia, with specific emphasis on its physiologic consequences in the surgical patient, and provides a contemporary definition of anemia for use in that context. Taking a broader, more functional view of anemia paves the way for understanding and appreciating the newer techniques of RBC conservation and transfusion avoidance, as well as of pharmacologic methods available to counter this disorder.