We have shown previously that inspired CO₂ (3-5%) improves ventilation-perfusion (V_A/Q) matching but with the consequence of mild arterial hypercapnia and respiratory acidosis. We hypothesized that adding CO₂ only late in inspiration to limit its effects to the conducting airways would enhance V_A/Q matching and improve oxygenation without arterial hypercapnia. CO₂ was added in the latter half of inspiration in a volume aimed to reach a concentration of 5% in the conducting airways throughout the respiratory cycle. Ten mixed-breed dogs were anesthetized and, in a randomized order, ventilated with room air, 5% CO₂ throughout inspiration, and CO₂ added only to the latter half of inspiration. The multiple inert gas elimination technique (MIGET) was used to assess V_A/Q heterogeneity. Late inspired CO₂ produced only very small changes in arterial pH (7.38 vs. 7.40) and arterial CO₂ (40.6 vs. 39.4 mm Hg). Compared to baseline, late inspired CO₂ significantly improved arterial oxygenation (97.5 vs. 94.2 mmHg), decreased the alveolar - arterial PO₂ difference (10.4 vs. 15.7 mmHg), and decreased the MIGET-derived alveolar-arterial inert gas area difference (A-a D area), a global measurement of V_A/Q heterogeneity (0.36 vs. 0.22). These changes were equal to those with 5% CO₂ throughout inspiration (PaO₂; 102.5 mmHg, alveolar-arterial PO₂ difference; 10.1 mmHg, and A-a D area; 0.21). In conclusion, we have established that the majority of the improvement in gas exchange efficiency with inspired CO₂ can be achieved by limiting its application to the conducting airways and does not require systemic acidosis.