Australian cotton (Gossypium hirsutum L.) is predominantly grown on heavy clay soils (Vertosols). Cotton grown on Vertosols often experiences episodes of low oxygen concentration in the root-zone, particularly after irrigation events. In subsurface drip-irrigation (SDI), cotton receives frequent irrigation and sustained wetting fronts are developed in the rhizosphere. This can lead to poor soil diffusion of oxygen, causing temporal and spatial hypoxia. As cotton is sensitive to waterlogging, exposure to this condition can result in a significant yield penalty. Use of aerated water for drip irrigation (‘oxygation’) can ameliorate hypoxia in the wetting front and, therefore, overcome the negative effects of poor soil aeration. The efficacy of oxygation, delivered via SDI to broadacre cotton, was evaluated over seven seasons (2005–06 to 2012–13). Oxygation of irrigation water by Mazzei air-injector produced significantly (P < 0.001) higher yields (200.3 v. 182.7 g m^–2) and water-use efficiencies. Averaged over seven years, the yield and gross production water-use index of oxygated cotton exceeded that of the control by 10% and 7%, respectively. The improvements in yields and water-use efficiency in response to oxygation could be ascribed to greater root development and increased light interception by the crop canopies, contributing to enhanced crop physiological performance by ameliorating exposure to hypoxia. Oxygation of SDI contributed to improvements in both yields and water-use efficiency, which may contribute to greater economic feasibility of SDI for broadacre cotton production in Vertosols.