The distribution of dissolved oxygen (DO) and its variability in Chunsu Bay were studied. Monthly hydrographic survey and realtime monitoring for water quality conditions were carried out in study area. Vertical distribution of DO shows the formation of hypoxia in the bottom water in the vicinity of the artificial dyke and net cage aquaculture site in summer. Annual mean of DO was 8.4 mg/l, with minimum monthly mean of 6.9 mg/l in July and maximum of 11.2 mg/l in March. Temporal variation of DO at bottom water around the net cage aquaculture site shows pronounced oscillatory characteristics with range of 0.5~7.0 mg/l. Coherency analyses between the tidal range and DO concentration shows that variation of DO is significantly coherent with tidal range at semi-diurnal period with 1~3.5 hours phase-lags. A simple DO budget model was set up to account for the formation of the extreme hypoxic conditions in Chunsu Bay. The governing equation is based on the mass-balance for kinetic process with simplified parameter of source and sink terms of DO. the source term is represented by replenishment through the vertical and horizontal diffusion and mixing. the sink terms comprise function of sediment oxygen demand (SOD) and carbonaceous biochemical oxygen demand (CBOD). The result of numerical solution indicates the dominant role of SOD as the overriding factor against the oxygen supply.