High altitude environments challenge small mammals with persistent low ambient temperatures that require high rates of aerobic heat production in face of low O2 availability. An important component of thermogenic capacity in rodents is non-shivering thermogenesis (NST) mediated by uncoupled mitochondrial respiration in brown adipose tissue (BAT). NST is plastic, and capacity for heat production increases with cold acclimation. However, in lowland native rodents, hypoxia inhibits NST in BAT. We hypothesize that highland deer mice (Peromyscus maniculatus) overcome the hypoxic inhibition of NST through changes in BAT mitochondrial function. We tested this hypothesis using lab born and raised highland and lowland deer mice, and a lowland congeneric (Peromyscus leucopus), acclimated to either warm normoxia (25°C, 760 mmHg) or cold hypoxia (5°C, 430 mmHg). We determined the effects of acclimation and ancestry on whole-animal rates of NST, the mass of interscapular BAT (iBAT), and uncoupling protein (UCP)-1 protein expression. To identify changes in mitochondrial function, we conducted high-resolution respirometry on isolated iBAT mitochondria using substrates and inhibitors targeted to UCP-1. We found that rates of NST increased with cold hypoxia acclimation but only in highland deer mice. There was no effect of cold hypoxia acclimation on iBAT mass in any group, but highland deer mice showed increases in UCP-1 expression and UCP-1-stimulated mitochondrial respiration in response to these stressors. Our results suggest that highland deer mice have evolved to increase the capacity for NST in response to chronic cold hypoxia, driven in part by changes in iBAT mitochondrial function.