A hallmark symptom of heart failure (HF) is exercise intolerance, typically evidenced by excessive shortness of breath, and/or fatigue with exertion. In recent years, the physiologic response to progressive exercise using direct measures of ventilation and gas exchange, commonly termed the cardiopulmonary exercise test (CPX), has evolved into an important clinical tool in the management of patients with HF. There is currently debate regarding the optimal CPX response to apply when stratifying risk for mortality, hospitalization, or other outcomes in patients with HF. Early studies in this area focused on the application of peak VO2 in predicting outcomes in patients considered for transplantation. More recently, the focus of these studies has shifted to an emphasis on ventilatory inefficiency, in lieu of or in combination with peak VO2, in estimating risk. The most widely studied index of ventilatory inefficiency has been the minute ventilation/carbon dioxide production (VE/VCO2) slope. A growing body of studies over the last decade has demonstrated that among patients with HF, the VE/VCO2 slope more powerfully predicts mortality, hospitalization, or both, than peak VO2. A number of investigations have also simultaneously examined the diagnostic importance of peak VO2 and the VE/VCO2 slope as well as their respective response to various interventions. This review examines the body of evidence which has used aerobic capacity and ventilatory efficiency as prognostic and diagnostic markers as well as endpoints in interventional trials. Based on this evidence, recommendations for future clinical and research applications of these CPX variables are provided.