Pulmonary function testing (PFT) serves many purposes in clinical practice, and in contrast to other laboratory measures, PFT results are often provided with a clinical interpretation. PFT interpretation depends on the clinical context, and multiple challenges influence PFT interpretation. Overall, the goal of PFT interpretation is to distinguish normal from abnormal, and this is affected by the selection of reference standards, as well as the arbitrary albeit not necessarily irrational choice of cut-off values. Controversies regarding PFT analysis may lead to important differences in interpretation. In this article, issues associated with the selection of reference standards are discussed, followed by a review of the controversies related to PFT interpretation in the diagnosis of obstructive ventilatory defect, restrictive ventilatory defect, gas transfer defect, and flow-volume loop abnormalities. Given the challenges facing PFT interpretation, no single interpretative algorithm is sufficient; rather, PFT interpretation requires a comprehensive approach including consideration of the clinical context, laboratory methodology, and reference standards and an understanding of the consequences of a normal or abnormal designation.