This study investigated the physiological responses and effects of exercise training under hypoxic conditions at the skeletal muscle level induced by reducing muscle temperature in cold water environment. Participants were divided into two intervention groups, cooling and control conditions, according to the water temperature of 15°C and 33°C where the training were conducted in. Eight participants in each group performed submaximal cycling exercise in the water for 30 minutes at the lactate threshold (LT) intensity, three times a week for four weeks (12 sessions). LT intensity was assessed at pre- and post-intervention in a 33°C water temperature environment. A progressive load cycling test was performed on land to assess maximal oxygen uptake (VO2max) and Wingate test was conducted to measure anaerobic power. In the cooling group, working muscle deoxygenation increased during submaximal and maximal exercise, suggesting an improvement in the muscle oxygen extraction capacity. However, no effects on aerobic capacity such as VO2max or LT intensity were observed. The improvement in mean power and time to peak during the Wingate test in the cooling group indicated that LT intensity exercise training in a cold water environment would increase anaerobic power.