Palmyra Atoll has four partially isolated lagoons up to 50 m in depth, each with complex and variable bottom topographies. Measurements of depth, temperature, salinity, turbidity and dissolved oxygen (DO) revealed a well-mixed shallow surface layer (0–10 m depth) and below that pronounced stratification of DO in the absence of a pycnocline. Turbidity increased in a step-like manner at ~25 m depth, at the oxycline. For all deep sections of the lagoon (>30 m), DO declined uniformly to 0% saturation. As determined from filtration, mass of particulates was independent of depth. Surface mixing and deep-water stratification are both stable at different temporal scales, including day versus night, daily, weekly and annually. We suggest that lagoon circulation is represented by a shallow, westward-moving surface layer of well-to-partially mixed water with high DO and low turbidity, underlain by a relatively static and temporally stable layer with low to zero DO and elevated turbidity. This is the first report of such conditions within a deep lagoon system, and only the second report of anoxic conditions in any such system. In deep-water, stable euxinic conditions reflect bottom topography, with dysoxic and anoxic water being constrained within silled basins. The occurrence and depth of large volumes of sediment-laden and dysoxic/anoxic water need to be considered in management proposals designed to increase water flow through the lagoon. These novel water column conditions most probably arose as a consequence of military construction work, consistent with published reports of profound changes to the atoll during 1940–1945. If so, they highlight the need to better understand the possible consequences of cutting channels and modification of lagoon flow at many atolls across the central Pacific Ocean.