As a result of nutrient loading from septic systems, a thick canopy of macroalgae covers the bottom of Waquoit Bay, an embayment on Cape Cod, Massachusetts. Using automated conductivity-temperature-oxygen recorders and manual profiles, we measured diel water column O2 changes during summer in the Childs River, the estuary of the bay with the highest housing density. At dawn in midsummer, bottom waters in the Childs River are chronically hypoxic due to high rates of benthic respiration. On sunny days benthic photosynthesis drives bottom water O2 to 10–15 mg l−1 by afternoon. The extent of the daily O2 excursion is directly proportional to daily irradiance. Large diel O2 excursions in bottom water are due to limited mixing of surface and bottom water. Density stratification exceeded two sigma-t units 85% of the time during midsummer in the Childs River. Because of stratification, hypoxia and even anoxia occur in this estuary. The first of several anoxic events was observed in Waquoit Bay in 1988, and we have attempted to evaluate factors that trigger anoxia. High rates of benthic respiration result in anoxia when replenishment of O2 during the day is limited by insufficient light. Our analysis of meteorological records during two recent anoxic events shows that anoxia develops overnight in midsummer during periods of peak summertime temperatures after several days of cloudy, moderately calm weather. Similarly critical conditions existed most summers since 1975, yet anoxic events in the bay have not been reported historically. If climatic warming occurs, anoxic events in the bay may occur more frequently even if algal stocks remain unchanged. Eutrophication of Waquoit Bay is similar to many other embayments in populated coastal areas, and anoxic events may indicate a chronic growing problem in these important ecosystems. However, in shallow, stratified embayments, anoxia may be transient and easily missed without frequent monitoring.