A 4-month-old healthy male infant underwent left herniotomy under general anesthesia with caudal block. Carbon dioxide (CO2) pneumoperitoneum was created through the left hernial sac for inspection of the right processus vaginalis. Episodes of desaturation associated with significant reduction in chest compliance were noted intraoperatively. This was overcome by increasing the inspired oxygen concentration (FiO2). The infant failed to regain consciousness and spontaneous respiration at the end of surgery. The chest compliance deteriorated further and clinically a CO2 pneumothorax (capnothorax) was suspected. The endtidal carbon dioxide (P(E)CO2) was initially low in the immediate postoperative period. Subsequent to the readministration of sevoflurane and manual ventilation with a Jackson Rees circuit, a sudden surge in P(E)CO2 with improvement of chest compliance was observed. At that time arterial blood gas (ABG) analysis revealed a PCO2 of 17.5 kPa (134 mmHg) and pH of 6.9. The causes of severe hypercarbia and the physiological changes observed in this infant are discussed.