Sphingosine-1-phosphate (S1P) is a bioactive signalling lipid highly enriched in mature erythrocytes, with unknown functions pertaining to erythrocyte physiology. Here by employing nonbiased high-throughput metabolomic profiling, we show that erythrocyte S1P levels rapidly increase in 21 healthy lowland volunteers at 5,260 m altitude on day 1 and continue increasing to 16 days with concurrently elevated erythrocyte sphingonisne kinase 1 (Sphk1) activity and haemoglobin (Hb) oxygen (O2) release capacity. Mouse genetic studies show that elevated erythrocyte Sphk1-induced S1P protects against tissue hypoxia by inducing O2 release. Mechanistically, we show that intracellular S1P promotes deoxygenated Hb anchoring to the membrane, enhances the release of membrane-bound glycolytic enzymes to the cytosol, induces glycolysis and thus the production of 2,3-bisphosphoglycerate (2,3-BPG), an erythrocyte-specific glycolytic intermediate, which facilitates O2 release. Altogether, we reveal S1P as an intracellular hypoxia-responsive biolipid promoting erythrocyte glycolysis, O2 delivery and thus new therapeutic opportunities to counteract tissue hypoxia.