The role of ventilation in the response in aerobic capacity and arterial oxygen saturation (SaO2) to acute hypoxic exercise was studied in 13 healthy active men divided into two groups based on their normoxic maximal exercise ˙VE/˙VO2 (LOW ≤ 27.7; HIGH ≥ 30.2) and PAO2 estimates (LOW ≤ 107 mm Hg; HIGH ≥ 110 mm Hg). Groups performed two incremental progressive maximal cycle exercise(˙VO2max) tests: normoxia (FIO2 = 20.9%) and acute hypoxia(FIO2 = 13.3%). To evaluate the influence of hypoxic ventilatory drive on ventilation, resting hypoxic ventilatory response (rHVR) was measured. LOW demonstrated lower ventilatory responses (˙VE,˙VE/˙VO2, and ˙VE/˙VCO2) during both normoxic and hypoxic exercise (P ≤ 0.05). During maximal hypoxic exercise, LOW had a greater decline in both ˙VO2max (21.6 mL·kg-1·min-1 vs 16.6 mL·kg-1·min-1) and SaO2 (31.9% vs 22.1%). Modest but significant correlations were identified between normoxic˙VE/˙VO2 and the decline in both ˙VO2max (r =-0.62) and SaO2 (r = -0.60). No correlations were identified between rHVR and any ventilatory response or SaO2. In summary, the results from this study suggest that a low exercise-induced hyperventilatory response is a significant mechanism in the arterial desaturation observed during hypoxic exercise and the decline in aerobic capacity associated with this desaturation. However, the ventilatory response to hypoxic exercise is not dependent upon hypoxic ventilatory drive.