Diffusion capacity is a medical term that refers to the ability of the lungs to transfer oxygen from inhaled air into the bloodstream. Testing of diffusion capacity is part of pulmonary examinations, which determine how well the lungs are functioning. The examination usually involves the patient inhaling a small amount of gas, after which the doctor measures how much of this gas has been transferred into the blood. If the diffusion capacity is low, it means that the lungs cannot effectively transfer oxygen into the blood, which can indicate various lung diseases.