This review comprehensively examines the intricate relationship between carbon monoxide (CO) diffusion capacity and chronic obstructive pulmonary disease (COPD). COPD, comprising chronic bronchitis and emphysema, presents a substantial global health burden, necessitating a nuanced understanding of pulmonary function parameters for effective diagnosis and management. The review delves into the physiological underpinnings, measurement techniques, and factors influencing CO diffusion capacity, emphasizing its pivotal role in assessing alveolar gas exchange efficiency. Key findings elucidate correlations between altered diffusion capacity and the severity of COPD, providing clinicians with valuable insights into disease progression. Considerations of age, gender, and ethnic disparities in normal CO diffusion capacity values highlight the importance of personalized interpretations. The clinical implications extend beyond diagnosis, influencing COPD management and prognostication, with potential applications in predicting treatment response. The review outlines avenues for future research, including advancements in measurement technologies and the exploration of novel imaging modalities and biomarkers. Ultimately, this review serves as a foundation for refining diagnostic approaches and treatment strategies and enhancing patient care in the dynamic landscape of COPD.