Sediment-water exchange processes are critical for water column oxygen dynamics and hypoxia formation. Using a three-dimensional physical-biogeochemical model of the Pearl River Estuary (PRE) coupling to different sediment parameterizations, we investigate the role of sediment-water fluxes of oxygen and nutrients in water column biogeochemistry and hypoxia generation in the typical eutrophic estuarine and coastal environment. Model simulations show that the predicted water column oxygen-related processes and hypoxia extent off the PRE are very sensitive to the parameterization of sediment oxygen consumption (SOC), highlighting the role of sediment in regulating oxygen dynamics off the PRE. Model-data comparisons for different sediment treatments further identify critical factors to accurately simulate coastal hypoxia. Finally, through a series of scenario simulations, we isolate and quantify the direct (via SOC) and indirect (via the released nutrients) contributions of sediment-water fluxes to water column oxygen dynamics and hypoxia development off the PRE.