Genetic determinants of sleep-disordered breathing (SDB), a common set of disorders that contribute to significant cardiovascular and neuropsychiatric morbidity, are not clear. Overnight nocturnal oxygen saturation (SaO2) is a clinically relevant and easily measured indicator of SDB severity but its genetic contribution has never been studied. Our recent study suggests nocturnal SaO2 is heritable. We performed linkage analysis, association analysis and haplotype analysis of average nocturnal oxyhaemoglobin saturation in participants in the Cleveland Family Study (CFS), followed by gene-based association and additional tests in four independent samples. Linkage analysis identified a peak (LOD = 4.29) on chromosome 8p23. Follow-up association analysis identified two haplotypes in angiopoietin-2 (ANGPT2) that significantly contributed to the variation of SaO2 (P = 8 × 10−5) and accounted for a portion of the linkage evidence. Gene-based association analysis replicated the association of ANGPT2 and nocturnal SaO2. A rare missense SNP rs200291021 in ANGPT2 was associated with serum angiopoietin-2 level (P = 1.29 × 10−4), which was associated with SaO2 (P = 0.002). Our study provides the first evidence for the association of ANGPT2, a gene previously implicated in acute lung injury syndromes, with nocturnal SaO2, suggesting that this gene has a broad range of effects on gas exchange, including influencing oxygenation during sleep.