Climate warming threatens marine life by increasing metabolic oxygen demand while decreasing oxygen availability. Tropical species living in warm, low oxygen environments may be most at risk, but their tolerances and exposures to these stressors remain poorly documented. We evaluated habitat restrictions for two brittle star species from Caribbean coral reefs by integrating field observations, laboratory experiments and an ecophysiological model. The absence of one species from the warmest reefs results from vital activity restrictions during episodic low oxygen extremes, even though average conditions are well within physiological tolerance limits. Over the past decade, warmer temperatures have been significantly correlated with a greater frequency and intensity of hypoxic events. Continued warming will progressively exclude hypoxia-tolerant species, even if average oxygen remains constant. A warming-driven increase in frequency or intensity of low oxygen extremes could similarly accelerate habitat loss across other marine ecosystems.