Abstract The minimum O 2 needed to fuel the demand of aquatic animals is commonly observed to increase with temperature, driven by accelerating metabolism. However, recent measurements of critical O 2 thresholds (‘ P crit ’) reveal more complex patterns, including those with a minimum at an inter-mediate thermal ‘optimum’. To discern the prevalence, physiological drivers, and biogeographic manifestations of such curves, we analyze new experimental and biogeographic data using a general dynamic model of aquatic water breathers. The model simulates the transfer of oxygen from ambient water, through a boundary layer and into animal tissues driven by temperature-dependent rates of metabolism, diffusive gas exchange, and ventilatory and circulatory systems with O 2 -protein binding. We find that a thermal optimum in P crit can arise even when all physiological rates increase steadily with temperature. This occurs when O 2 supply at low temperatures is limited by a process that is more temperature sensitive than metabolism, but becomes limited by a less sensitive process at warmer temperatures. Analysis of species respiratory traits suggests this scenario is not uncommon in marine biota, with ventilation and circulation limiting supply under cold conditions and diffusion limiting supply at high temperatures. Using biogeographic data, we show that species with these physiological traits inhabit lowest O 2 waters near the optimal temperature for hypoxia tolerance, and are restricted to higher O 2 at temperatures above and below this optimum. Our results imply that O 2 tolerance can decline under both cold and warm conditions, and thus may influence both poleward and equatorward species range limits. Significance Statement Physiology shapes the ecology, biogeography, and climate responses of marine species. In aquatic ectotherms, accelerating metabolism and lowered oxygen availability generally result in increasing oxygen limitation with warming. Here we present evidence for thermal optima in hypoxia tolerance of diverse species that is explained by a dynamical model of organismal physiology. Our results indicate that this potentially widespread bidirectional pattern explains species biogeographic limits in cold and warm waters. It can be understood using a generalized Metabolic Index of O 2 supply to demand, which captures the variable observed trends between temperature and species hypoxia sensitivity. Oxygen limitation of aerobic metabolism in cold water has far-reaching implications for marine biogeography and species migrations under climate change.