Oxygen-carbon dioxide-The process by which oxygen passes from the air in the LUNGS to the HEMOGLOBIN in the BLOOD, and carbon dioxide from the hemoglobin passes into the air in the lungs. Oxygen-carbon dioxide exchange is fundamental to life and is the primary function of the lungs. Oxygen-carbon dioxide exchange takes place between the alveoli, the tiny bubblelike sacs deep within the lungs, and the capillaries, the tiniest blood vessels of the cardiovascular system.