1. Multiwire surface electrodes were used to measure local hydrogen clearance curves and tissue PO2 in vivo. Evaluation of the initial slopes of the hydrogen clearance curves enabled the measurement of capillary blood flow and its distribution. 2. Capillary blood flow and tissue PO2 frequency distribution histograms were measured in the m. sartorius of anaesthetized, relaxed mongrel dogs under conditions of normoxic (Fi, O2 = 0.3) and hypoxic (Fi, O2 = 0.15 and 0.1) artificial ventilation. 3. Stepwise hypoxaemia (hypoxic hypoxia) induced an increasing discrepancy between capillary blood flow and arterial blood flow. The former decreased by 6% whereas the latter increased by 86%. 4. PO2 histograms provided no evidence of cellular anoxia even at Fi,O2 = 0.1. Capillary blood flow histograms suggested a redistribution of the local pattern of flow. 5. A 34.7% reduction of O2 consumption was observed as the result of severe hypoxaemia. 6. The concept of heterogeneity of capillary blood flow as a functional O2 reserve is presented, together with evidence for oxygen-dependent regulation of capillary blood flow and oxygen consumption.