We previously observed young lambs to be more tolerant of hypoxia; compared with older lambs, they accumulate lactate at a slower rate during comparable reduction in cardiac output, and have a greater percent decrease in cardiac output before onset of systemic lactate accumulation. To determine the mechanism of lactic acidosis and the cause for this "tolerance," we reduced cardiac output progressively in seven chronically catheterized conscious lambs (16.4 + 5.1 d) and measured hepatic and gastrointestinal (GI) blood flow (radioactive microspheres) and delivery, uptake, and extraction of lactate and O2. Hepatic O2 consumption declined proportionately below a critical hepatic O2 delivery (approximately 2 mL O2/min/kg), corresponding to the systemic O2 delivery associated with the onset of systemic lactate accumulation. As hepatic O2 delivery decreased below the critical value, there was initially net hepatic lactate uptake and then a change to net production when the O2 delivery decreased below approximately 1 mL O2/min kg. The GI tract had net lactate production at rest, but surprisingly switched to lactate uptake as cardiac output decreased. The mechanism of lactic acidosis was failure of hepatic lactate uptake to increase despite increased hepatic lactate delivery, as reported in adults subjects. However, in contrast, there was "true" hepatic dysfunction and lactate production only at the lowest levels of cardiac output, after onset of systemic lactate accumulation. Moreover, we speculate that tolerance of young lambs to hypoxia is at least due to two factors: 1) hepatic lactate uptake is maintained beyond the "critical" O2 delivery and fall in hepatic O2 consumption, and 2) there is a switch to lactate uptake by the GI tract serving to buffer the lactate.