BACKGROUND: Exertional desaturation is an important predictor of mortality in patients with interstitial lung disease. We evaluated the prevalence of exertional desaturation in subjects with interstitial lung disease and determined its relationship with the prescription of ambulatory oxygen therapy. METHODS: Our retrospective analysis examined prospectively collected data from interstitial lung disease registries of 2 Melbourne hospitals: Alfred Health and Austin Health. All patients with baseline the 6-min walk tests on room air were included. We evaluated the prescription of ambulatory oxygen therapy, up to 3 months after 6-min walk tests, among those with exertional desaturation. RESULTS: Of the 400 subjects, 214 (54%) had exertional desaturation. The prevalence of desaturation increased with the severity of lung function impairment (FVC measurement: 33% for > 75% predicted, 69% for 50 -75% predicted, 86% for < 50% predicted; diffusing capacity of the lung for carbon monoxide measurement: 20% for > 55% predicted, 64% for 36 -55% predicted, 93% for < 35% predicted, P < .001 for both severity classifications). There was no difference in the prevalence of exertional desaturation among common disease subtypes (P ؍ .17). Among the desaturators, 14 (7%) had resting hypoxemia and all were prescribed long-term oxygen therapy. Of the remaining 200 with exertional desaturation only, 58 (29%) were prescribed ambulatory oxygen therapy. Multiple logistic regression showed independent associations between the ambulatory oxygen therapy prescription and shorter 6-min walk distance (P < .001) as well as worse FVC (% predicted, P ؍ .037). CONCLUSIONS: Exertional desaturation is common in subjects with interstitial lung disease. More severely impaired exercise capacity and worse lung function are associated with the prescription of ambulatory oxygen therapy in interstitial lung disease. Key words: interstitial lung disease; pulmonary fibrosis; oxygen; exercise; hypoxemia. [Respir Care 2019;64(3):299 -306.