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Marine ecosystems world-wide are threatened by oxygen deficiency, with potential serious consequences for ecosystem functioning and the goods and services they provide. While the effects of hypoxia on benthic species diversity are well documented, the effects on ecosystem function have only rarely been assessed in real-world settings. To better understand the links between structural changes in macro- and meiofaunal communities, hypoxic stress and benthic ecosystem function (benthic nutrient fluxes, community metabolism), we sampled a total of 11 sites in Haystensfjord and Askerofjord (Swedish west coast) in late summer, coinciding with the largest extent and severity of seasonal hypoxia in the area. The sites spanned oxic to anoxic bottom water, and a corresponding gradient in faunal diversity. Intact sediment cores were incubated to measure fluxes of oxygen and nutrients (NO3-, NO2-, NH4+, PO43-, SiO4) across the sediment-water interface. Sediment profile imaging (SPI) footage was obtained from all sites to assess structural elements and the bioturbadon depth, and additional samples were collected to characterise sediment properties and macro- and meiofaunal community composition. Bottom-water O-2 concentration was the main driver of macrofauna communities, with highest abundance and biomass, as well as variability, at the sites with intermediate O-2 concentration. Meiofauna on the other hand was less sensitive to bottom-water O-2 concentration. Oxygen was the main driver of nutrient fluxes too, but macrofauna as well meiofauna were also significant predictors; DistLM analyses indicated that O-2 concentration, macrofaunal abundance or biomass, and meiofaunal abundance collectively explained 63%, 30% and 28% of the variation in sediment O-2 consumption, NH4+ flux and PO43+ flux, respectively. The study provides a step towards a more realistic understanding of the link between benthic fauna and ecosystem functioning, and the influence of disturbance on this relationship, which is important for management decisions aimed at protecting the dwindling biodiversity in the coastal zones around the world.