Facultative air-breathing fish can persist in hypoxic waters due to their capacity to acquire atmospheric oxygen. Most studies examining responses of air-breathing fish to aquatic hypoxia have occurred under experimental conditions. How air-breathing fish respond to hypoxic conditions in the field has received less attention. Using depth sensor transmitters and an array of acoustic receivers to monitor the facultative air-breathing Australian lungfish (Neoceratodus forsteri), we investigated habitat preferences and behavioural responses to seasonal hypoxic zones in a riverine impoundment. Three-dimensional (3-D) kernel utilisation distribution (KUD) models revealed that during stratified conditions, lungfish remained above the oxycline, rarely venturing into hypoxic waters, whereas during holomixis lungfish used a wider range of depths. Total volumetric space utilisation did not change significantly during stratified periods, but the distribution of space used changed, constrained by the oxycline. Despite N. forsteri having lungs to supplement oxygen requirements, the presence of a hypoxic zone constrained the core (50% 3-D-KUD) volumetric space used by lungfish to <1.6% of the total available space of the study area. With increasing demand for new impoundments in many tropical and subtropical regions, the present study provides insights to how air-breathing fish species may respond to altered riverine conditions from impoundments.