While pulse oximetry using remote photoplethysmography (rPPG) is used in medicine and consumer health, sound theoretical foundations for this methodology are not established. Similarly to traditional pulse oximetry, rPPG oximetry uses two wavelengths to calculate the tissue oxygenation using the so-called ratio-of-ratios, R. However, the relationship between R and tissue oxygenation has not been derived analytically. As such, rPPG oximetry relies mostly on empirical methods. This article aimed to build theoretical foundations for pulse oximetry in rPPG geometry. Using the perturbation approach in diffuse approximation for light propagation in tissues, we obtained an explicit expression of the AC/DC ratio for the rPPG signal. Based on this ratio, the explicit expression for “ratio-of-ratios” was obtained. We have simulated the dependence of “ratio-of-ratios” on arterial blood saturation across a wide range (SaO2 = 70–100%) for several commonly used R/IR light sources (660/780, 660/840, 660/880, and 660/940 nm) and found that the obtained relationship can be modeled by linear functions with an extremely good fit (R2 = 0.98–0.99) for all considered R/IR pairs. Moreover, the location of the pulsatile volume can be extracted from rPPG data. From experimental data, we found that the depth of blood pulsations in the human forehead can be estimated as 0.6 mm on the arterial side, which points to the papillary dermis/subpapillary vascular plexus origin of the pulsatile volume.