In humans and other mammals, isocapnic hypoxia sustained for 20–60 min exhibits a biphasic ventilation pattern: initial increase followed by a significant ventilatory decline (“roll-off”) to a lesser intermediate plateau. During sustained hypoxia, the mechanical action and activity of the diaphragm have not been studied; thus we assessed diaphragm function in response to hypoxic breathing. Thirteen spontaneously breathing awake canines were exposed to moderate levels of sustained isocapnic hypoxia lasting 20–25 min (80 ± 2% pulse oximeter oxygen saturation). Breathing pattern and changes in muscle length and electromyogram (EMG) activity of the costal and crural diaphragm were continuously recorded. Mean tidal shortening and EMG activity of the costal and crural diaphragm exhibited an overall biphasic pattern, with initial brisk increase followed by a significant decline ( P < 0.01). Although costal and crural shortening did not differ significantly with sustained hypoxia, this equivalence in segmental shortening occurred despite distinct and differing EMG activities of the costal and crural segments. Specifically, initial hypoxia elicited a greater costal EMG activity compared with crural ( P < 0.05), whereas sustained hypoxia resulted in a lesser crural EMG decline/attenuation than costal ( P < 0.05). We conclude that sustained isocapnic hypoxia elicits a biphasic response in both ventilation and diaphragmatic function and there is clear differential activation and contribution of the two diaphragmatic segments. This different diaphragm segmental action is consistent with greater neural activation of costal diaphragm during initial hypoxia, then preferential sparing of crural activation as hypoxia is sustained. NEW & NOTEWORTHY In humans and other mammals, during isocapnic hypoxia sustained for 20–60 min ventilation exhibits a biphasic pattern: initial increase followed by significant ventilatory decline (“roll-off”). During sustained hypoxia, the function of the diaphragm is unknown. This study demonstrates that the diaphragm reveals a biphasic action during the time-dependent hypoxic “roll-off” in ventilation. These results also highlight that the two diaphragm segments, costal and crural, show differing, distinctive contributions to diaphragm function during sustained hypoxia.