Changing arterial oxygen content (C) has a highly sensitive influence on the rate of peripheral locomotor muscle fatigue development. We examined the effects of C on exercise performance and its interaction with peripheral quadriceps fatigue. Eight trained males performed four 5 km cycling time trials (power output voluntarily adjustable) at four levels of C (17.6–24.4 ml O2 dl−1), induced by variations in inspired O2 fraction (0.15–1.0). Peripheral quadriceps fatigue was assessed via changes in force output pre- versus post-exercise in response to supra-maximal magnetic femoral nerve stimulation (ΔQtw; 1–100 Hz). Central neural drive during the time trials was estimated via quadriceps electromyogram. Increased C from hypoxia to hyperoxia resulted in parallel increases in central neural output (43%) and power output (30%) during cycling and improved time trial performance (12%); however, the magnitude of ΔQtw (−33 to −35%) induced by the exercise was not different among the four time trials (P > 0.2). These effects of C on time trial performance and ΔQtw were reproducible (coefficient of variation = 1–6%) over repeated trials at each F on separate days. In the same subjects, changing C also affected performance time to exhaustion at a fixed work rate, but similarly there was no effect of ΔC on peripheral fatigue. Based on these results, we hypothesize that the effect of C on locomotor muscle power output and exercise performance time is determined to a significant extent by the regulation of central motor output to the working muscle in order that peripheral muscle fatigue does not exceed a critical threshold.