At rest the brain has a small lactate release. When arterial lactate concentration is elevated during exercise, the brain takes up lactate, while it continues to demonstrate a release to systemic circulation. During exercise in hypoxia cerebral net lactate uptake is close to zero despite a marked elevation in systemic lactate. To determine whether this reduction in net lactate uptake is due to increased cerebral lactate production, we measured cerebral lactate turnover and oxidation with tracer dilution methodology ([1-¹³C]lactate) and arterial to right internal jugular venous differences in 9 healthy individuals at rest and during exercise in normoxia and hypoxia (pO₂ 35±6 mmHg). Calculated mitochondrial oxygen partial pressure decreased 11±10 mmHg at rest and further to 13±11 mmHg during exercise in hypoxia (p<0.001). Hypoxia increased arterial lactate concentration, particular during exercise (9.89 ±4.47 mmol^-1) and the cerebral balance changed from a release at rest to an uptake. Cerebral lactate release increased ~30% (NS) at rest and ~6-fold (1.0±1.0 mmol^-1 min^-1; p<0.001) during exercise in hypoxia. These results indicate that cerebral circulation can not compensate when arterial oxygen availability is reduced and that the brain has a substantial capacity for anaerobic metabolism when oxygen delivery is compromised in hypoxia.