Lumpfish (Cyclopterus lumpus) is currently used as cleaner fish in Norwegian Atlantic salmon (Salmo salar) farming to control parasitic lice on salmon. The need for high numbers of lumpfish necessitates intensive farming of this species but very limited knowledge is available on the environmental requirements of lumpfish in culture. The present study was therefore carried out to investigate the tolerance of lumpfish to varying water exchange rates and oxygen saturations. Four triplicated treatment groups were established at different water exchange rates, which caused oxygen saturations of 55% (0.7Lmin−1), 69% (1.2Lmin−1), 81% (1.9Lmin−1) and 96% (6Lmin−1). Decreasing water exchange rate and oxygen saturations negatively affected growth, even in the fish groups held at 81% oxygen saturation. The fish group held at 55% oxygen saturation had almost no growth in body mass and showed sign of fin-infections and were terminated halfway through the experiment. A high workload associated with oxygen extraction and reduced appetite is considered the reason for reduced growth at lower oxygen saturations. While plasma cortisol levels in the groups held at 81 and 96% oxygen saturation corresponded to those considered typical for unstressed fish (<10ngmL−1), the levels of plasma cortisol of fish in the 69 and 55% oxygen saturation groups were above 20ngmL−1 in November, indicating a state of chronic stress. A fast, albeit weak, cortisol response to stressors in the lumpfish was confirmed in a separate, 2h long acute handling and hypoxia experiment. Lack of differences between treatments in plasma lactate levels indicates that the lumpfish reduced their food intake and locomotory activity sufficiently to avoid resorting to anaerobic metabolism when exposed to reduced oxygen saturations. It is concluded that the juvenile lumpfish is sensitive to reduced water oxygen saturations and that oxygen saturations below 80% in aquaculture should be avoided.