Despite residence at >4000 m above sea level, many Tibetan highlanders, unlike Andean counterparts and lowlanders at altitude, exhibit haemoglobin concentration ([Hb]) within the typical sea-level range. Genetic adaptations in Tibetans are associated with this relatively low [Hb], yet the functional relevance of the lower [Hb] remains unknown. To address this, we examined each major step of the oxygen transport cascade [ventilation (VE), cardiac output (QT) and diffusional conductance in lung (DL) and muscle (DM)] in Tibetan males at maximal exercise on a cycle ergometer. Ranging from 15.2 to 22.9 g dl-1, [Hb] was negatively associated with peak O2 uptake per kilogram (r = -0.45, P < 0.05) and both cardiac output (QT/kg: r = -0.54, P < 0.02) and muscle O2 diffusion conductance (DM/kg: r = -0.44, P < 0.05) but not ventilation, arterial partial pressure of O2 or pulmonary diffusing capacity. Most variance in peak O2 uptake per kilogram was attributed to QT, DM and arterial partial pressure of CO2 (r2 = 0.90). In summary, lack of polycythaemia in Tibetans is associated with increased exercise capacity, which is explained by elevated cardiac, muscle and, to a small extent, ventilatory responses rather than pulmonary gas exchange. Whether lower [Hb] is the cause or result of these changes in O2 transport or is causally unrelated will require additional study.