Objective: To study the change in O2 saturation during induction of anaesthesia in children. A comparison between Halothane and Isoflurane. Study design: Prospective comparative study. Place and duration of study: Department of anaesthesia Services Hospital Lahore. Patient and methods: This study was conducted in 2004 on 70 children irrespective of sex age range 1-10 year. Results: A total 70 children were studied 35 in each group. The result showed that halothane is a better inhalational induction agent then isoflurane. Conclusion: Halothane is better than isoflurane for inhalational induction in children.