Hypoxia is a form of habitat degradation that has accelerated in coastal waters world-wide in recent years due to eutrophication and global climate change. Low-oxygen stress is commonly recognized by the large-scale formation of dead zones which represent general ecological collapse. Contrary to the alarming trends associated with hypoxia, the quahog clam (Mercenaria mercenaria) thrives in chronically hypoxic areas of Narragansett Bay, RI (USA), and is now the most important fishery in the ecosystem. Transplant and predator exclusion experiments revealed that hypoxia provided a general predation refuge for bivalves, but only the hypoxia-tolerant quahog was sufficiently hypoxia tolerant to gain a net benefit from the refuge. As a consequence, the quahog was the only species to persist when the diversity of bivalves crashed in hypoxic areas. Moreover, the densities of both legal and sub-legal harvest sized quahogs were higher in the hypoxic predation refuge than in less stressful higher predation sites. Though hypoxia may lead to the loss of some species, the ecosystem services provided by sufficiently tolerant species may be enhanced.