Bottom-water oxygen supply is a key factor governing the biogeochemistry and community composition of marine sediments. Whether it also determines carbon burial rates remains controversial. We investigated the effect of varying oxygen concentrations (170 to 0 μM O2) on microbial remineralization of organic matter in seafloor sediments and on community diversity of the northwestern Crimean shelf break. This study shows that 50% more organic matter is preserved in surface sediments exposed to hypoxia compared to oxic bottom waters. Hypoxic conditions inhibit bioturbation and decreased remineralization rates even within short periods of a few days. These conditions led to the accumulation of threefold more phytodetritus pigments within 40 years compared to the oxic zone. Bacterial community structure also differed between oxic, hypoxic, and anoxic zones. Functional groups relevant in the degradation of particulate organic matter, such as Flavobacteriia, Gammaproteobacteria, and Deltaproteobacteria, changed with decreasing oxygenation, and the microbial community of the hypoxic zone took longer to degrade similar amounts of deposited reactive matter. We conclude that hypoxic bottom-water conditions—even on short time scales—substantially increase the preservation potential of organic matter because of the negative effects on benthic fauna and particle mixing and by favoring anaerobic processes, including sulfurization of matter.