Background: Athough hypothyroidism has insidious onset and relatively asymptomatic, exertional dyspnea and fatigue can be the presenting complaints.Objectives: To assess functional lung impairment in hypothyroid patients both at rest and during exercise. Patients and methods: A case control study was carried out on 42 patients with newly diagnosed hypothyroidism and 12 control subjects. Hypothyroidism was diagnosed based on high value of thyroid stimulating hormone TSH≥ 6 uIU/ml, and low value of FT4≤ 0.8 ng/dl, both groups had chest x ray, spirometry, diffusing capacity for carbon monoxide DLCO, arterial blood gases(ABG) and symptom limited exercise testing using treadmill. Results: Both groups were comparable as regard age, sex and body mass index. Although ABG and spirometry were within normal in both groups, FVC%, and FEF25-75%were significantly reduced in hypothyroid group(P 0.014, 0.000 respectively), DLCO significantly reduced in hypothyroidism( P 0.005). As regard exercise testing parameters, maximum oxygen consumption VO2%, minute ventilation VE, tidal volume VT, and oxygen pulse VO2/HR were significantly reduced in hypothyroidism (0.005, 0.000, 0.000, and 0.02 respectively). TSH significantly negatively correlated with FEV1%, FEF25-75%, and DLCO while they significantly positively correlated with FT4 Conclusion: Even with presence of normal chest x ray , arterial blood gases, and spirometry in patients with hypothyroidism DLCO and exercise testing parameters can be significantly reduced.