Connectivity of coral reef fish populations relies on successful dispersal of a pelagic larval phase. Pelagic larvae must exhibit high swimming abilities to overcome ocean and reef currents, but once settling onto the reef, larvae transition to endure habitats that become hypoxic at night. Therefore, coral reef fish larvae must rapidly and dramatically shift their physiology over a short period of time. Taking an integrative, physiological approach, using swimming respirometry, and examining hypoxia tolerance and transcriptomics, we show that larvae of cinnamon anemonefish (Amphiprion melanopus) rapidly transition between “physiological extremes” at the end of their larval phase. Daily measurements of swimming larval anemonefish over their entire early development show that they initially have very high mass-specific oxygen uptake rates. However, oxygen uptake rates decrease midway through the larval phase. This occurs in conjunction with a switch in haemoglobin gene expression and increased expression of myoglobin, cytoglobin, and neuroglobin, which may all contribute to the observed increase in hypoxia tolerance. Our findings indicate that critical ontogenetic changes in the gene expression of oxygen-binding proteins may underpin the physiological mechanisms needed for successful larval recruitment to reefs.