It was recently established that supplemental oxygen administration significantly enhances memory formation in healthy young adults. In the present study, a double-blind, placebo-controled design was employed to assess the cognitive and physiological effects of subjects' inspiration of oxygen or air (control) prior to undergoing simple memory and reaction-time tasks. Arterial blood oxygen saturation and heart rate were monitored during each of six phases of the experiment, corresponding to baseline, gas inhalation, word presentation, reaction time, distractor and word recall, respectively. The results confirm that oxygen administration significantly enhances cognitive performance above that seen in the air inhalation condition. Subjects who received oxygen recalled more words and had faster reaction times. Moreover, compared to participants who inhaled air, they exhibited significant hyperoxia during gas administration, word presentation, and the reaction-time task, but not at other phases of the experiment. Compared to baseline, heart rate was significantly elevated during the word presentation, reaction-time, and distractor tasks in both the air and oxygen groups. In the oxygen group, significant correlations were found between changes in oxygen saturation and cognitive performance. In the air group, greater changes in heart rate were associated with more improved cognitive performance. These results are discussed in the context of cognitive demand and metabolic supply. It is suggested that under periods of cognitive demand a number of physiological responses are brought into play that serve to increase the delivery of metabolic substrates to active neural tissue. These mechanisms can be supplemented by increased availability of circulating blood oxygen, resulting in an augmentation of cognitive performance. Heart rate reactivity and the capacity for increased blood oxygen appear to be important physiological individual differences mediating these phenomena.