All vertebrates except cold-water ice fish transport oxygen via hemoglobin packaged in red blood cells (RBCs). Vertebrate RBCs vary in size by thirtyfold. Differences in RBC size have been known for over a century, but the functional significance of RBC size remains unknown. One hypothesis is that large RBCs are a primitive character. Agnathans have larger RBCs than do mammals. However, the largest RBCs are found in urodele amphibians which is inconsistent with the hypothesis that large RBCs are primitive. Another possibility is that small RBCs increase blood oxygen transport capacity. Blood hemoglobin concentration ([Hb]) and mean RBC hemoglobin concentration (MCHC) increase from Agnatha to birds and mammals. However, the changes in [Hb] and MCHC do not parallel changes in RBC size. In addition, RBC size does not affect blood viscosity. Thus, there is no clear link between RBC size and oxygen transport capacity. We hypothesize that RBC size attends changes in capillary diameter. This hypothesis is based on the following observations. First, RBC width averages 25% larger than capillary diameter which insures cell deformation during capillary flow. Functionally, RBC deformation minimizes diffusion limitations to gas exchange. Second, smaller capillaries are associated with increased potential for diffusive gas exchange. However, smaller capillaries result in higher resistances to blood flow which requires higher blood pressures. We propose that the large capillary diameters and large RBCs in urodeles reflect the evolutionary development of a pulmonary vascular supply. The large capillaries reduced systemic vascular resistances enabling a single ventricular heart to supply blood to two vascular circuits, systemic and pulmonary, without developing high pressures on the pulmonary side. The large RBCs preserved diffusive gas exchange efficiency in the large capillaries.