Greater oxygen availability has been hypothesized to be important in allowing the evolution of larger invertebrates during the Earth's history, and across aquatic environments. We tested for evolutionary and developmental responses of adult body size of Drosophila melanogaster to hypoxia and hyperoxia. Individually reared flies were smaller in hypoxia, but hyperoxia had no effect. In each of three oxygen treatments (hypoxia, normoxia or hyperoxia) we reared three replicate lines of flies for seven generations, followed by four generations in normoxia. In hypoxia, responses were due primarily to developmental plasticity, as average body size fell in one generation and returned to control values after one to two generations of normoxia. In hyperoxia, flies evolved larger body sizes. Maximal fly mass was reached during the first generation of return from hyperoxia to normoxia. Our results suggest that higher oxygen levels could cause invertebrate species to evolve larger average sizes, rather than simply permitting evolution of giant species.