Oxyhemoglobin is formed during physiological respiration when oxygen binds to the heme component of the protein hemoglobin in red blood cells. This process occurs in the pulmonary capillaries adjacent to the alveoli of the lungs. The oxygen then travels through the blood stream to be dropped off at cells where it is utilized as a terminal electron acceptor in the production of ATP by the process of oxidative phosphorylation. It does not, however, help to counteract a decrease in blood pH. Ventilation, or breathing, may reverse this condition by removal of carbon dioxide, thus causing a shift up in pH.
Hemoglobin exists in two forms, a taut (tense) form (T) and a relaxed form (R). Various factors such as low pH, high CO and high 2,3 BPG at the level of the tissues favor the taut form, which has low oxygen affinity and releases oxygen in the tissues. Conversely, a high pH, low CO, or low 2,3 BPG favors the relaxed form, which can better bind oxygen. The partial pressure of the system also affects O affinity where, at high partial pressures of oxygen (such as those present in the alveoli), the relaxed (high affinity, R) state is favoured. Inversely, at low partial pressures (such as those present in respiring tissues), the (low affinity, T) tense state is favoured. Additionally, the binding of oxygen to the iron(II) heme pulls the iron into the plane of the porphyrin ring, causing a slight conformational shift. The shift encourages oxygen to bind to the three remaining heme units within hemoglobin (thus, oxygen binding is cooperative).
Classically, the iron in oxyhemoglobin is seen as existing in the iron(II) oxidation state.  However, the complex of oxygen with heme iron is diamagnetic, whereas both oxygen and high-spin iron(II) are paramagnetic.  Experimental evidence strongly suggests heme iron is in the iron(III) oxidation state in oxyhemoglobin, with the oxygen existing as superoxide anion (O) or in a covalent charge-transfer complex.