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Microbial colonizers of humans have evolved to adapt to environmental cues and to sense nutrient availability. Oxygen is a constantly changing environmental parameter in different host tissues and in different types of infection. We describe how Candida albicans, an opportunistic fungal pathogen, can modulate the host response under hypoxia and anoxia. We found that high infiltration of polymorphonuclear leukocytes (PMNs) to the site of infection contributes to a low oxygen milieu in a murine subdermal abscess. A persistent hypoxic environment did not affect viability or metabolism of PMNs. Under oxygen deprivation, however, infection with C. albicans disturbed specific PMN responses. PMNs were not able to efficiently phagocytose, produce ROS, or release extracellular DNA traps. Failure to launch an adequate response was caused by C. albicans cell wall masking of β-glucan upon exposure to low oxygen levels which hindered PAMP sensing by Dectin-1 on the surfaces of PMNs. This in turn contributed to immune evasion and enhanced fungal survival. The cell wall masking effect is prolonged by the accumulation of lactate produced by PMNs under low oxygen conditions. Finally, adaptation to oxygen deprivation increased virulence of C. albicans which we demonstrated using a Caenorhabditis elegans infection model.IMPORTANCE Successful human colonizers have evolved mechanisms to bypass immune surveillance. Infiltration of PMNs to the site of infection led to the generation of a low oxygen niche. Exposure to low oxygen levels induced fungal cell wall masking, which in turn hindered pathogen sensing and antifungal responses by PMNs. The cell wall masking effect was prolonged by increasing lactate amounts produced by neutrophil metabolism under oxygen deprivation. In an invertebrate infection model, C. albicans was able to kill infected C. elegans nematodes within 2 days under low oxygen conditions, whereas the majority of uninfected controls and infected worms under normoxic conditions survived. These results suggest that C. albicans benefited from low oxygen niches to increase virulence. The interplay of C. albicans with innate immune cells under these conditions contributed to the overall outcome of infection. Adaption to low oxygen levels was in addition beneficial for C. albicans by reducing susceptibility to selected antifungal drugs. Hence, immunomodulation of host cells under low oxygen conditions could provide a valuable approach to improve current antifungal therapies.