Many lacustrine systems, despite management efforts to control eutrophication, are hypoxic during stratified periods. Hypoxia is a major concern, not only for its impact on aquatic life but also for its potential to stimulate production of the greenhouse gases, methane (CH₄) and nitrous oxide (N₂O). We investigated the drivers of hypoxia in Muskegon Lake, a temperate dimictic freshwater estuary that experiences frequent hypolimnetic mixing due to atmospheric forces, riverine inputs, and intrusion of oxic water from coastal upwelling in Lake Michigan. Primary production and respiration (R) rates obtained from a δ¹⁸O mass balance model were similar to other mesotrophic environments (0.56–26.31 and 0.57–13.15 mmol O₂ m⁻³ day⁻¹, respectively), although high P/R (≥2 in mid-summer) indicated there is sufficient autochthonous production to support hypoxia development and persistence. The isotopic enrichment factor for respiration (ε_obs) varied markedly and was least negative in August of both sampling years, consistent with high R rates. Hypoxic conditions were associated with accumulation of N₂O but not CH₄, and emissions of N₂O are among the highest reported from lakes. The average N₂O site preference value of 25.4‰ indicates that the majority of N₂O was produced by nitrification via hydroxylamine oxidation, despite the presence of resilient hypoxia. While it has been hypothesized that denitrification acts as a sink for N₂O in hypoxic lakes, it is clear that Muskegon Lake functions as a strong source of N₂O via nitrification. Further considerations of lakes as global sources of N₂O thus warrant a closer evaluation of nitrification-fueled N₂O production.