Background: This study was conducted to demonstrate the effects of nocturnal oxygen therapy on patients of interstitial lung disease (ILD) with associated obstructive sleep apnoea syndrome (OSAS). Methods: 12 patients (5 males, 7 females) of ILD with OSAS were included in the study. All patients had a restrictive abnormality on spirometry with a mean forced vital capacity (FVC) of 40 (+/- 14.22). The mean daytime pressures of oxygen in arterial blood (Pao2) were 71.88 (+/- 12.44) and that of carbon dioxide was 36.39 (+/- 8.27). 10 out of the 12 patients had a BMI of less then 25, while 2 patients had a BMI of 27 each. None of the patients had complaints of snoring or excessive daytime sleepiness. All patients were subjected to nighttime recording of respiratory variables (NTRRV). The first night study was done while breathing room air followed by a second night study supplemented with 2 litres of nasally administered oxygen. The effect of nasally administered oxygen on the apnoea- hypopnea index (AHI) was studied. Results: The mean AHI while breathing room air was 23.33 (+/- 6.27). On breathing oxygen at 2 litres per minute AHI dropped to 8 (+/- 8.03). In 11 out of 12 patients, the AHI decreased from a mean of 23.09 to 6.36, while the AHI in 1 patient remained unchanged. Thus overall there was a significant improvement (p<0.001) in AHI from 23.33 (+/- 6.27) to 8 (+/- 8.03) on breathing 2 litres per minute of nasally administered oxygen. Baseline oxyhaemoglobin saturation improved in all patients. Conclusion: Nocturnal oxygen therapy has a beneficial effect on the obstructive sleep apnea syndrome in selected patients of ILD and OSAS.