The oxygen transport capacity of phospholipid vesicles encapsulating purified Hb (Hb-vesicles, HbV) produced with a P₅₀ of 8 mmHg (HbV₈), and 29 mmHg (HbV₂₉) were investigated in the hamster chamber window model using microvascular measurements to determine oxygen delivery during extreme hemodilution. Two isovolemic hemodilution steps were performed with the plasma expander 5% recombinant albumin (rHSA) until hematocrit (Hct) was 35% of baseline. Isovolemic blood volume exchange was continued using HbVs suspended in rHSA solution to a total Hb concentration of 5.7 g/dl in blood. P₅₀ was modified by coencapsulating pyridoxal 5'-phosphate (PLP) at the molar ratios of [PLP]/[Hb] = 0, and 2.5, respectively. Final Hct was 11% (3.7 g red blood cell Hb/dl) for the HbV groups, with a plasma Hb concentration derived from HbV of 2.1 ± 0.1 g/dl after blood exchange with HbV₈ or HbV₂₉. All the groups showed stable blood pressure and heart rate. Hemodilution was also continued to Hct 11% with rHSA which served as a reference to count for the Hct reduction. Arterial oxygen tensions were significantly higher than baseline for the HbV groups and the rHSA group, and significantly lower for the HbV groups compared to the rHSA group. Blood pressure was significantly higher for the HbV₈ group compared to HbV₂₉. Arteriolar and venular blood flows were significantly higher for the HbV groups than baseline. Blood flow was the same as baseline for rHSA. Microvascular oxygen delivery and extraction were similar for the HbV groups, being lower for the rHSA group (P < 0.05). Venular and tissue pO₂ were statistically higher for HbV₈ vs. the HbV₂₉ and rHSA groups (P < 0.05). These findings show that improved tissue pO₂ is obtained when red blood cells deliver oxygen in combination with an oxygen carrier with high rather than low oxygen affinity.