Key points Mitochondrial function changes over time at high altitudes, but the potential benefits of these changes for hypoxia resistance remains unclear. We used high‐altitude‐adapted populations of deer mice, which exhibit enhanced aerobic performance in hypoxia, to examine whether changes in mitochondrial physiology or intracellular distribution in the muscle contribute to hypoxia resistance. Permeabilized muscle fibres from the gastrocnemius muscle had higher respiratory capacities in high‐altitude mice than in low‐altitude mice. Highlanders also had higher mitochondrial volume densities, due entirely to an enriched abundance of subsarcolemmal mitochondria, such that more mitochondria were situated near the cell membrane and adjacent to capillaries. There were several effects of hypoxia acclimation on mitochondrial function, some of which were population specific, but they differed from the evolved changes in high‐altitude natives, which probably provide a better indication of adaptive traits that improve performance and hypoxia resistance at high altitudes. Abstract High‐altitude natives that have evolved to live in hypoxic environments provide a compelling system to understand how animals can overcome impairments in oxygen availability. We examined whether these include changes in mitochondrial physiology or intracellular distribution that contribute to hypoxia resistance in high‐altitude deer mice (Peromyscus maniculatus). Mice from populations native to high and low altitudes were born and raised in captivity, and as adults were acclimated to normoxia or hypobaric hypoxia (equivalent to 4300 m elevation). We found that highlanders had higher respiratory capacities in the gastrocnemius (but not soleus) muscle than lowlanders (assessed using permeabilized fibres with single or multiple inputs to the electron transport system), due in large part to higher mitochondrial volume densities in the gastrocnemius. The latter was attributed to an increased abundance of subsarcolemmal (but not intermyofibrillar) mitochondria, such that more mitochondria were situated near the cell membrane and adjacent to capillaries. Hypoxia acclimation had no significant effect on these population differences, but it did increase mitochondrial cristae surface densities of mitochondria in both populations. Hypoxia acclimation also altered the physiology of isolated mitochondria by affecting respiratory capacities and cytochrome c oxidase activities in population‐specific manners. Chronic hypoxia decreased the release of reactive oxygen species by isolated mitochondria in both populations. There were subtle differences in O2 kinetics between populations, with highlanders exhibiting increased mitochondrial O2 affinity or catalytic efficiency in some conditions. Our results suggest that evolved changes in mitochondrial physiology in high‐altitude natives are distinct from the effects of hypoxia acclimation, and probably provide a better indication of adaptive traits that improve performance and hypoxia resistance at high altitudes.