Oxygen is poorly soluble in plasma, so that less than 2 percent of oxygen is transported dissolved in plasma. The vast majority of oxygen is bound to hemoglobin, a protein contained within red cells. Hemoglobin is composed of four iron-containing ring structures (hemes) chemically bonded to a large protein (globin). Each iron atom can bind and then release an oxygen molecule. Enough hemoglobin is present in normal human blood to permit transport of about 0.2 millilitre of oxygen per millilitre of blood. The quantity of oxygen bound to hemoglobin is dependent on the partial pressure of oxygen in the lung to which blood is exposed. The curve representing the content of oxygen in blood at various partial pressures of oxygen, called the oxygen-dissociation curve, is a characteristic S-shape because binding of oxygen to one iron atom influences the ability of oxygen to bind to other iron sites. In alveoli at sea level, the partial pressure of oxygen is sufficient to bind oxygen to essentially all available iron sites on the hemoglobin molecule.

Not all of the oxygen transported in the blood is transferred to the tissue cells. The amount of oxygen extracted by the cells depends on their rate of energy expenditure. At rest, venous blood returning to the lungs still contains 70 to 75 percent of the oxygen that was present in arterial blood; this reserve is available to meet increased oxygen demands. During extreme exercise the quantity of oxygen remaining in venous blood decreases to 10 to 25 percent. At the steepest part of the oxygen-dissociation curve (the portion between 10 and 40 millimetres of mercury partial pressure), a relatively small decline in the partial pressure of oxygen in the blood is associated with a relatively large release of bound oxygen.

Hemoglobin binds not only to oxygen but to other substances such as hydrogen ions (which determine the acidity, or pH, of the blood), carbon dioxide, and 2,3-diphosphoglycerate (2,3-DPG; a salt in red blood cells that plays a role in liberating oxygen from hemoglobin in the peripheral circulation). These substances do not bind to hemoglobin at the oxygen-binding sites. However, with the binding of oxygen, changes in the structure of the hemoglobin molecule occur that affect its ability to bind other gases or substances. Conversely, binding of these substances to hemoglobin affects the affinity of hemoglobin for oxygen. (Affinity denotes the tendency of molecules of different species to bind to one another.) Increases in hydrogen ions, carbon dioxide, or 2,3-DPG decrease the affinity of hemoglobin for oxygen, and the oxygen-dissociation curve shifts to the right. Because of this decreased affinity, an increased partial pressure of oxygen is required to bind a given amount of oxygen to hemoglobin. A rightward shift of the curve is thought to be of benefit in releasing oxygen to the tissues when needs are great in relation to oxygen delivery, as occurs with anemia or extreme exercise. Reductions in normal concentrations of hydrogen ions, carbon dioxide, and 2,3-DPG result in an increased affinity of hemoglobin for oxygen, and the curve is shifted to the left. This displacement increases oxygen binding to hemoglobin at any given partial pressure of oxygen and is thought to be beneficial if the availability of oxygen is reduced, as occurs at extreme altitude.

Temperature changes affect the oxygen-dissociation curve similarly. An increase in temperature shifts the curve to the right (decreased affinity; enhanced release of oxygen); a decrease in temperature shifts the curve to the left (increased affinity). The range of body temperature usually encountered in humans is relatively narrow, so that temperature-associated changes in oxygen affinity have little physiological importance.