Recent studies indicate limited utility of nitrogen multiple-breath washout (N2MBW) in infancy and advocate for using sulfur hexafluoride (SF6) MBW in this age-group. Modern N2MBW systems, such as EXHALYZER D (ECO MEDICS AG, Duernten, Switzerland), use O2 and CO2 sensors to calculate N2 concentrations (in principle, N2% = 100 - CO2% - O2%). High O2 and CO2 concentrations have now been shown to significantly suppress signal output from the other sensor, raising apparent N2 concentrations. We examined whether improved EXHALYZER D N2 signal, accomplished after thorough examination of this CO2 and O2 interaction on gas sensors and its correction, leads to better agreement between N2MBW and SF6MBW in healthy infants and toddlers. Within the same session, 52 healthy children aged 1-36mo [mean = 1.30 (SD = 0.72) yr] completed SF6MBW and N2MBW recordings (EXHALYZER D, SPIROWARE version 3.2.1) during supine quiet sleep. SF6 and N2 SPIROWARE files were reanalyzed offline with in-house software using identical algorithms as in SPIROWARE with or without application of the new correction factors for N2MBW provided by ECO MEDICS AG. Applying the improved N2 signal significantly reduced mean [95% confidence interval (CI)] differences between N2MBW and SF6MBW recorded functional residual capacity (FRC) and lung clearance index (LCI): for FRC, from 26.1 (21.0, 31.2) mL, P < 0.0001, to 1.18 (-2.3, 4.5) mL, P = 0.5, and for LCI, from 1.86 (1.68, 2.02), P < 0.001, to 0.44 (0.33, 0.55), P < 0.001. Correction of N2 signal for CO2 and O2 interactions on gas sensors resulted in markedly closer agreement between N2MBW and SF6MBW outcomes in healthy infants and toddlers.