Adenosine is released by skeletal and cardiac muscles when their metabolism increases: it serves to couple O2 supply with O2 demand by causing vasodilatation. This review argues that adenosine plays a similar role in skeletal muscle in systemic hypoxia. It accounts for approximately 50% of the increase in muscle vascular conductance and, within muscle, it causes dilatation of individual arterioles, thus maximizing the distribution of O2 and allowing O2 consumption to remain constant when O2 delivery is reduced. In vivo and in vitro studies have indicated that adenosine can induce dilatation in several different ways. This review argues that during systemic hypoxia, adenosine is predominantly released from the endothelium and acts on endothelial A1 receptors to produce dilatation in a nitric oxide (NO)-dependent manner. A1 receptor stimulation increases the synthesis of NO by a process initiated by opening of ATP-sensitive K+ (KATP) channels. Moreover, recent findings suggest that prostaglandins also make a major contribution to the hypoxia-induced dilatation, but that the dilator pathways for adenosine, NO and prostaglandins are interdependent. In addition, adenosine released from the skeletal muscle fibres contributes indirectly to the dilatation by stimulating A1 and A2 receptors on the muscle fibres, opening KATP channels and allowing efflux of K+, which is a vasodilator. Finally, by acting on endothelial A1 receptors, adenosine attenuates the vasoconstrictor effects of constant or bursting patterns of sympathetic activity. This limits the extent to which the sympathetic nervous system can reduce O2 delivery to muscle when it is already compromised by systemic hypoxia.