Mathematical simulations of oxygen delivery to tissue from capillaries, that take into account the particulate nature of blood flow, predict the existence of PO₂ gradients between erythrocytes (RBCs). As RBCs and plasma alternately pass an observation point, these gradients are manifested as rapid fluctuations in PO₂ also known as erythrocyte-associated transients (EATs). The impact of hemodilution on EATs and oxygen delivery at the capillary level of the microcirculation has yet to be elucidated. Therefore, in the present study phosphorescence quenching microscopy was used to measure EATs and oxygen tension (PO₂) in capillaries of the rat spinotrapezius muscle at the following systemic Hcts (Hct_sys): Normal (39%), and after moderate (HES1; 27%) or severe (HES2; 15%) isovolemic hemodilution using a 6% hetastarch solution. A 532 nm laser, generating 10 µs pulses concentrated onto a 0.9 µm spot, was used to obtain plasma PO₂ 100 times/sec at points along surface capillaries of the muscle. Mean capillary PO₂ (P_cO₂; Mean ± SEM mmHg, n = capillary number) significantly decreased between conditions (Normal = 56 ± 2, n = 45; HES1 = 47 ± 2, n = 62; HES2 = 27 ± 2, n = 52). In addition, the magnitude of PO₂ transients (PO₂, mmHg) significantly decreased with hemodilution (Normal = 19 ± 1, n = 45; HES1 = 11 ± 1, n = 62; HES2 = 6 ± 1, n = 52). Results suggest that the decrease in P_cO₂ and PO₂ with hemodilution is primarily dependent on Hct_sys and subsequent microvascular compensations.