Seasonal blooms of the scyphozoan jellyfish Aurelia sp. in the northern Gulf of Mexico broadly overlap with summer-fall hypoxia of the Louisiana–Texas shelf. It has been suggested previously that increased cultural eutrophication and hypoxia promote outbreaks of jellyfish by favoring the medusa stage of scyphozoans, since hypoxia affects their prey more than the jellyfish themselves. However, little information exists on what role hypoxia plays on the benthic polyp (scyphistoma) stage of the scyphozoan life-history. Understanding hypoxic effects on scyphozoan benthic stages is especially important in the northern Gulf of Mexico, since settlement and growth rates of its sessile benthic community are high and space is limited. Therefore, we used a combination of laboratory and field experiments to investigate the effect of low dissolved oxygen (DO) concentrations on the survival and growth of the polyps of the moon jellyfish Aurelia sp. and whether the general sessile community was relatively impacted by low DO to reduce spatial competition for hard substrate (i.e. if low DO might create transient openings in the sessile community for polyp settlement). We conducted a set of laboratory experiments that revealed low DO had a positive effect on planulae settlement. Greatest planulae settlement rates occurred under lowest DO concentrations (1.3mgl−1), indicating that reduced DO promotes settlement, perhaps as a signal of physiological stress on planula swimming. In a second set of experiments, survival of scyphistomae decreased only marginally under prolonged (56days) hypoxic conditions. Numerical growth due to asexual budding remained positive under prolonged hypoxia but at a rate significantly lower than the normoxic treatment. A third set of laboratory experiments showed that naturally seeded sessile community coverage was significantly reduced under similar levels of hypoxia when compared to normoxia. A field experiment placing polyp-seeded plates at different depths and oxygen concentrations off south-central Louisiana during seasonal hypoxia showed that polyps had higher survivorship in deeper, lower oxygen waters when compared to higher oxygen surface waters. Our data indicate that tolerance to the physiological stresses of hypoxia in the scyphozoan polyp stage and the reduction of sessile competition and predation in hypoxic areas may make these areas particularly vulnerable to jellyfish blooms.