A noninvasive system and method for monitoring arterial oxygen saturation levels which may also be used to continuously and noninvasively monitor blood pressure, including generating a continuous blood pressure waveform. The apparatus of the described embodiment includes a red LED and an infrared LED which are positioned to direct their respective light beams into, or reflected by a patient's body part. A phototransducer device is positioned to receive the light beams which are transmitted through the body part. A pressure cuff surrounds the body part and the LEDs. During calibration periods, pressure is applied to the body part and the systolic and mean blood pressures are determined and the arterial oxygen saturation level in the body part is determined. The pressure is then released from the body part and another arterial oxygen saturation level is determined and the difference between the two oxygen saturation levels is used as a calibration factor during later monitoring periods to remove the effect of nonarterial oxygen saturation levels on the values obtained during the subsequent monitoring period. The systolic and mean arterial pressures measured during a calibration period are used to develop a Hardy model compliance curve wherein the pressure-volume relationship of the arteries is determined. The modulation of the red LED light beam which strikes the photodetector, which corresponds to changes in arterial volume, can be used according to the Hardy model to continuously calculate a blood pressure waveform for the patient.