Children are at increased risk of perioperative respiratory and cardiovascular complications because of their unique respiratory and cardiovascular physiology compared to adults. Anaesthesia can exaggerate respiratory deterioration in young children because of their inability to control respiration and inherent susceptibility to rapid desaturation, airway obstruction, early respiratory fatigue and lung atelectasis. Premature infants (less than 60 weeks of postconceptional age) can be exposed to the danger of prolonged apnoea and consequent worsening of respiratory function. The transitional phase of circulation is vulnerable to revert to persistent foetal circulation in neonates. Myocardium and autonomic control of the heart is immature and different in neonates and infants compared to older children and adults and are predisposed to inadvertent life-threatening haemodynamic changes during the perioperative period. In this review article, we discuss respiratory and cardiovascular physiology in neonates, infants and younger children and their differences with older children and adults. We mainly focus on transitional physiology of both respiratory and cardiovascular system in newborns and infants and the deleterious changes that may occur during anaesthesia or perioperatively.