Abstract The present invention relates to chemically modified hemoglobin produced by a novel and efficient method in which stroma-free hemoglobin is first effectively deoxygenated and reduced and then conjugated with a polyalkylene oxide such as polyethylene glycol (PEG) under conditions which maintain the structural integrity of the heme oxygen binding site. In specific, preferred embodiments of the invention, the deoxygenation and reduction is performed under an inert atmosphere by the amino acid cysteine. In additional specific, preferred embodiments, the structural integrity of the heme oxygen binding site is maintained by a high anionic concentration in the reaction mixture. In further preferred specific embodiments of the invention, the polyalkylene oxide is polyethylene glycol; in still further preferred specific embodiments of the invention, the polyalkylene oxide is linked to hemoglobin via a urethane (carbamate) linkage. The novel PEG-modified hemoglobin compounds of the invention exhibit superior oxygen transport capabilities, extended half-life, and importantly, low immunogenicity.