Laoyehai is a lagoon located on the east coast of Hainan and is impacted heavily by human activities (especially those related to aquaculture). Laoyehai is characterized by its eutrophic and hypoxic waters. During previous dry and flood seasons (specifically, April 2010 and August 2011), when hypoxia occurred, field work was conducted to observe the dissolved oxygen (DO) and to collect organic matter. Hypoxia was significant in the spring season with surface DO as low as 50%, while the bottom hypoxic water prevailed in both seasons. In the spring season, the C/N ratio of particulate organic matter was higher than that observed in the summer season (C/N in the spring: 9.7, C/N in the summer: 7.7). Organic matter composition indicated by amino acids showed that there was strong in situ production in the spring relative to that in the summer. Lower C/N values and higher carbon and nitrogen yields of amino acids (AA C yield, AA N yield) in the summer showed active in situ production, suggesting that organic matter was mainly derived from phytoplankton. This also explains the sufficient surface DO in the summer. The degradation of particulate organic matter increased with the decrease of dissolved oxygen, indicating that the particulate organic matter and its degradation were the key driving factors for oxygen consumption in the lagoon. Meanwhile, we found that the relationship between dissolved organic matter components and DO was not significant.