Climate-driven declines in oxythermal habitat in freshwater lakes can impose prolonged constraints on cold-water fishes sensitive to hypoxia. How fish cope with severe habitat limitations is not well understood, yet has implications for their persistence. Here, we use acoustic-positioning telemetry to assess seasonal habitat occupancy and activity patterns of lake whitefish (Coregonus clupeaformis), a cold-water benthivore, in a small boreal lake that regularly faces severe oxythermal constraints during summer stratification. During this stratified period, they rarely (< 15% of detections) occupied depths with water temperatures > 10 °C (interquartile range = 5.3–7.9 °C), which resulted in extensive use (> 90% of detections) of water with < 4 mg L−1 dissolved oxygen (DO; interquartile range = 0.3–5.3 mg L−1). Lake whitefish were least active in winter and spring, but much more active in summer, when only a small portion of the lake (1–10%) contained optimal oxythermal habitat (< 10 °C and > 4 mg L−1 DO), showing frequent vertical forays into low DO environments concurrent with extensive lateral movement (7649 m d−1). High rates of lateral movement (8392 m d−1) persisted in the complete absence of optimal oxythermal habitat, but without high rates of vertical forays. We found evidence that lake whitefish are more tolerant of hypoxia (< 2 mg L−1) than previously understood, with some individuals routinely occupying hypoxic habitat in winter (up to 93% of detections) despite the availability of higher DO habitat. The changes in movement patterns across the gradient of habitat availability indicate that the behavioural responses of lake whitefish to unfavourable conditions may lead to changes in foraging efficiency and exposure to physiological stress, with detrimental effects on their persistence.