When aquatic reptiles, birds and mammals submerge, they typically exhibit a dive response in which breathing ceases, heart rate slows, and blood flow to peripheral tissues is reduced. The profound dive response that occurs during forced submergence sequesters blood oxygen for the brain and heart while allowing peripheral tissues to become anaerobic, thus protecting the animal from immediate asphyxiation. However, the decrease in peripheral blood flow is in direct conflict with the exercise response necessary for supporting muscle metabolism during submerged swimming. In free diving animals, a dive response still occurs, but it is less intense than during forced submergence, and whole-body metabolism remains aerobic. If blood oxygen is not sequestered for brain and heart metabolism during normal diving, then what is the purpose of the dive response? Here, we show that its primary role may be to regulate the degree of hypoxia in skeletal muscle so that blood and muscle oxygen stores can be efficiently used. Paradoxically, the muscles of diving vertebrates must become hypoxic to maximize aerobic dive duration. At the same time, morphological and enzymatic adaptations enhance intracellular oxygen diffusion at low partial pressures of oxygen. Optimizing the use of blood and muscle oxygen stores allows aquatic, air-breathing vertebrates to exercise for prolonged periods while holding their breath.