Pulse oximetry is a well-established tool routinely used in many settings of modern medicine to determine a patient's arterial oxygen saturation and heart rate. The decreasing size of pulse oximeters over recent years has broadened their spectrum of use. For diagnosis and treatment of sleep-disordered breathing, overnight pulse oximetry helps determine the severity of disease and is used as an economical means to detect sleep apnea. In this article, we outline the clinical utility and economical benefit of overnight pulse oximetry in sleep and breathing disorders in adults and highlight the controversies regarding its limitations as presented in published studies.