The new two-breath CO₂ method was employed to test the hypotheses that small alterations in arterial Pco₂ had an impact on the magnitude and dynamic response time of the CO₂ effect on cerebrovascular resistance (CVRi) and the dynamic autoregulatory response to fluctuations in arterial pressure. During a 10-min protocol, eight subjects inspired two breaths from a bag with elevated Pco₂, four different times, while end-tidal Pco₂ was maintained at three levels: hypocapnia (LoCO₂, 8 mmHg below resting values), normocapnia, and hypercapnia (HiCO₂, 8 mmHg above resting values). Continuous measurements were made of mean blood pressure corrected to the level of the middle cerebral artery (BP_MCA), Pco₂ (estimated from expired CO₂), and mean flow velocity (MFV, of the middle cerebral artery by Doppler ultrasound), with CVRi = BP_MCA/MFV. Data were processed by a system identification technique (autoregressive moving average analysis) with gain and dynamic response time of adaptation estimated from the theoretical step responses. Consistent with our hypotheses, the magnitude of the Pco₂-CVRi response was reduced from LoCO₂ to HiCO₂ [from −0.04 (SD 0.02) to −0.01 (SD 0.01) (mmHg·cm⁻¹·s)·mmHg Pco₂⁻¹] and the time to reach 95% of the step plateau increased from 12.0 ± 4.9 to 20.5 ± 10.6 s. Dynamic autoregulation was impaired with elevated Pco₂, as indicated by a reduction in gain from LoCO₂ to HiCO₂ [from 0.021 ± 0.012 to 0.007 ± 0.004 (mmHg·cm⁻¹·s)·mmHg BP_MCA⁻¹], and time to reach 95% increased from 3.7 ± 2.8 to 20.0 ± 9.6 s. The two-breath technique detected dependence of the cerebrovascular CO₂ response on Pco₂ and changes in dynamic autoregulation with only small deviations in estimated arterial Pco₂.