Every summer, a large area (15,000 km2 on average) over the Texas–Louisiana shelf in the northern Gulf of Mexico turns hypoxic due to decay of organic matter that is primarily derived from nutrient inputs from the Mississippi/Atchafalaya River System. Interannual variability in the size of the hypoxic zone is large. The 2008 Action Plan put forth by the Mississippi River/Gulf of Mexico Watershed Nutrient Task Force, an alliance of multiple state and federal agencies and tribes, calls for a reduction of the size of the hypoxic zone through nutrient management in the watershed. Comprehensive models help build mechanistic understanding of the processes underlying hypoxia formation and variability and are thus indispensable tools for devising efficient nutrient reduction strategies and for building reasonable expectations as to what responses can be expected for a given nutrient reduction. Here we present such a model, evaluate its hypoxia simulations against monitoring observations, and assess the sensitivity of the hypoxia simulations to model resolution, variations in sediment oxygen consumption, and choice of physical horizontal boundary conditions. We find that hypoxia simulations on the shelf are very sensitive to the parameterization of sediment oxygen consumption, a result of the fact that hypoxic conditions are restricted to a relatively thin layer above the bottom over most of the shelf. We show that the strength of vertical stratification is an important predictor of dissolved oxygen concentration in bottom waters and that modification of physical horizontal boundary conditions can have a large effect on hypoxia simulations because it can affect stratification strength.