In Chile, avocado (Persea americana Mill.) orchards are often located in poorly drained, low-oxygen soils, situation which limits fruit production and quality. The objective of this study was to evaluate the effect of injecting soil with hydrogen peroxide (H2O2) as a source of molecular oxygen, on plant water status, net CO2 assimilation, biomass and anatomy of avocado trees set in clay loam soil with water content maintained at field capacity. Three-year-old ’Hass’ avocado trees were planted outdoors in containers filled with heavy loam clay soil with moisture content sustained at field capacity. Plants were divided into two treatments, (a) H2O2 injected into the soil through subsurface drip irrigation and (b) soil with no H2O2 added (control). Stem and root vascular anatomical characteristics were determined for plants in each treatment in addition to physical soil characteristics, net CO2 assimilation (A), transpiration (T), stomatal conductance (gs), stem water potential (SWP), shoot and root biomass, water use efficiency (plant biomass per water applied [WUEb]). Injecting H2O2 into the soil significantly increased the biomass of the aerial portions of the plant and WUEb, but had no significant effect on measured A, T, gs, or SWP. Xylem vessel diameter and xylem/phloem ratio tended to be greater for trees in soil injected with H2O2 than for controls. The increased biomass of the aerial portions of plants in treated soil indicates that injecting H2O2 into heavy loam clay soils may be a useful management tool in poorly aerated soil.