Abstract Hypoxia can have profound influences on the circulation. In humans, acute exposure to moderate hypoxia has been demonstrated to result in vasodilatation in the coronary, cerebral, splanchnic and skeletal muscle vascular beds. The combination of submaximal exercise and hypoxia produces a ‘compensatory’ vasodilatation and augmented blood flow in contracting skeletal muscles relative to the same level of exercise under normoxic conditions. This augmented vasodilatation exceeds that predicted by a simple sum of the individual dilator responses to hypoxia alone and normoxic exercise. Additionally, this enhanced hypoxic exercise hyperaemia is proportional to the hypoxia-induced fall in arterial oxygen (O2) content, thus preserving muscle O2 delivery and ensuring it is matched to demand. Several vasodilator pathways have been proposed and examined as likely regulators of skeletal muscle blood flow in response to changes in arterial O2 content. The purpose of this review is to put into context the present evidence regarding mechanisms responsible for the compensatory vasodilatation observed during hypoxic exercise in humans. Along these lines, this review will highlight the interactions between various local metabolic and endothelial derived substances that influence vascular tone during hypoxic exercise.