Summary While complex physiological mechanisms exist to regulate and optimize tissue oxygenation under various conditions, clinical and experimental evidence indicates that anaemia, unchecked, is associated with organ injury and unfavourable outcomes. More data (especially from human studies) are needed to answer questions regarding the optimal approaches to the treatment of acute and chronic anaemia. Meantime, allogeneic blood transfusions remain the most common treatment, particularly in surgical/trauma patients and those with moderate-to-severe anaemia. Clinical studies emphasize the paradox that both anaemia and transfusion are associated with organ injury and increased morbidity and mortality across a wide span of disease states and surgical interventions. Further characterization of the mechanisms of injury is needed to appropriately balance these risks and to develop novel treatment strategies that will improve patient outcomes. Here, we present the current understanding of the physiological mechanisms of tissue oxygen delivery, utilization, adaptation, and survival in the face of anaemia and current evidence on the independent (and often, synergistic) deleterious impact of anaemia and transfusion on patient outcomes. The risks of anaemia and transfusion in the light of substantial variations in transfusion practices, increasing costs, shrinking pool of donated resources, and ambiguity about actual clinical benefits of banked allogeneic blood demand better management strategies targeted at improving patient outcomes.