Most eukaryotes require oxygen for their survival and, with increasing multicellular complexity, oxygen availability and delivery rates vary across the tissues of complex organisms. In humans, healthy tissues have markedly different oxygen gradients, ranging from the hypoxic environment of the bone marrow (where our haematopoietic stem cells reside) to the lungs and their alveoli, which are among the most oxygenated areas of the body. Immune cells are therefore required to adapt to varying oxygen availability as they move from the bone marrow to peripheral organs to mediate their effector functions. These changing oxygen gradients are exaggerated during inflammation, where oxygenation is often depleted owing to alterations in tissue perfusion and increased cellular activity. As such, it is important to consider the effects of oxygenation on shaping the immune response during tissue homeostasis and disease conditions. In this Review, we address the relevance of both physiological oxygenation (physioxia) and disease-associated hypoxia (where cellular oxygen demand outstrips supply) for immune cell functions, discussing the relevance of hypoxia for immune responses in the settings of tissue homeostasis, inflammation, infection, cancer and disease immunotherapy.