Hypoxia, a growing worldwide problem, has been intermittently present in the modern Baltic Sea since its formation ca. 8000 cal. yr BP. However, both the spatial extent and intensity of hypoxia have increased with anthropogenic eutrophication due to nutrient inputs. Physical processes, which control stratification and the renewal of oxygen in bottom waters, are important constraints on the formation and maintenance of hypoxia. Climate controlled inflows of saline water from the North Sea through the Danish Straits is a critical controlling factor governing the spatial extent and duration of hypoxia. Hypoxia regulates the biogeochemical cycles of both phosphorus (P) and nitrogen (N) in the water column and sediments. Significant amounts of P are currently released from sediments, an order of magnitude larger than anthropogenic inputs. The Baltic Sea is unique for coastal marine ecosystems experiencing N losses in hypoxic waters below the halocline. Although benthic communities in the Baltic Sea are naturally constrained by salinity gradients, hypoxia has resulted in habitat loss over vast areas and the elimination of benthic fauna, and has severely disrupted benthic food webs. Nutrient load reductions are needed to reduce the extent, severity, and effects of hypoxia.