Over the past 20 years it has become increasingly apparent that hyponatremic encephalopathy is a major cause of inhospital morbidity and mortality, particularly in postoperative patients. The factors that may lead to death or permanent brain damage and the susceptible patient groups have been gradually elucidated. Hyponatremic encephalopathy most commonly leads to brain damage in young women and in prepubescent children. The causes of brain damage include brain edema, cerebral hypoxemia, decreased brain blood flow, increased intracranial pressure, and improper therapy. Cerebral hypoxia occurs through a combination of impaired brain adaptation and cerebral vasoconstriction. Brain adaptation consists largely of brain cell loss of sodium and potassium by means of the Na-K adenosine triphosphatase (ATPase) system. There is also loss of organic osmolytes. The brain Na-K ATPase system is impaired by a combination of vasopressin plus estrogen and is stimulated by testosterone. Similarly, vasopressin plus estrogen leads to cerebral vasoconstriction, resulting in a decrement of brain oxygen utilization and cerebral blood flow. Vasopressin also directly decreases brain production of ATP. The combination leads to hypoxic brain damage, which appears to be the major cause of brain damage associated with hyponatremic encephalopathy. Measurement of arterial P o 2 in patients with symptomatic hyponatremia usually demonstrates a P o 2 <50 mm Hg. Improper therapy is another possible cause of brain damage in patients with hyponatremic encephalopathy. The type and distribution of such lesions are similar to those found in patients with hyponatremic encephalopathy who have severe hypoxia. Current scientific knowledge indicates that patient survival can be improved through aggressive treatment of hypoxia associated with hyponatremic encephalopathy, particularly in young women.