The aim of this study was to test whether oxygenation in acutely ischemic, collateralized tissue may be improved by normovolemic hemodilution with a solution containing liposome-encapsulated human Hb (HbV). A skin flap model in anesthetized hamsters was used, which consisted of two parts receiving either anatomic or collateral perfusion. Microhemodynamics were investigated with intravital microscopy. Partial tissue oxygen tension was measured with a Clark-type microprobe. Hemodilution was obtained by exchanging 50% of the total blood volume with HbV suspended in 8% human serum albumin (HSA8) or 6% Dextran 70 (Dx70). The size of the vesicles was 276 nm, the P(50) was 22 mmHg, and the Hb concentration of the solutions was 7.5 g/dl. Colloid osmotic pressure and viscosity were 49.9 mmHg and 8.7 cP for HbV-Dx70 and 40.0 mmHg and 2.9 cP for HbV-HSA8, respectively. Hemodilution with HbV-Dx70 led to an increase in microvascular blood flow in the ischemic microvessels to maximally 158% (median, P < 0.01), whereas blood flow remained virtually unchanged after hemodilution with HbV-HSA8. In the ischemic tissue, oxygen tension was improved from 11.9 to 17.0 mmHg (P < 0.01) after hemodilution with HbV-Dx70 but remained virtually unchanged after hemodilution with HbV-HSA8. Our study suggests that the oxygenation in acutely ischemic, collateralized tissue may be improved by normovolemic hemodilution with HbV suspended in Dx70. The effect was achieved by an increase in microcirculatory blood flow related to the rheological properties of the suspending medium.