Increased global temperatures have opened previously inhospitable habitats, such as at higher elevations. However, the reduction of oxygen partial pressure with increase in elevation represents an important physiological constraint that may limit colonization of such habitats, even if the thermal niche is appropriate. To test the mechanisms underlying the response to ecologically relevant levels of hypoxia, we performed a translocation experiment with the common wall lizard (Podarcis muralis), a widespread European lizard amenable to establishing populations outside its natural range. We investigated the impacts of hypoxia on the oxygen physiology and reproductive output of gravid common wall lizards and the subsequent development and morphology of their offspring. Lowland females transplanted to high elevations increased their haematocrit and haemoglobin concentration within days and maintained routine metabolism compared with lizards kept at native elevations. However, transplanted lizards suffered from increased reactive oxygen metabolite production near the oviposition date, suggesting a cost of reproduction at high elevation. Transplanted females and females native to different elevations did not differ in reproductive output (clutch size, egg mass, relative clutch mass or embryonic stage at oviposition) or in post-oviposition body condition. Developing embryos reduced heart rates and prolonged incubation times at high elevations within the native range and at extreme high elevations beyond the current range, but this reduced oxygen availability did not affect metabolic rate, hatching success or hatchling size. These results suggest that this opportunistic colonizer is capable of successfully responding to novel environmental constraints in these important life-history stages.