The objective of the present study is to compare work capacity (maximal power output) and selected physiological factors (arterial oxygen saturation and heart rate at rest and during maximal exercise, hemoglobin concentration and forced vital capacity) in groups of native Tibetan children living at different residential altitudes (3,700 vs. 4,300 m above sea level) and across ethnicity (native Tibetan vs. Han Chinese children living at the same altitude of 3,700 m). The maximal power output was 2.68 ±0.49 W/kg in native Tibetans at 3,700 m , which was 3.5% higher than Han Chinese at 3,700 m (2.59 ±0.48 W/kg), and 19.6% higher than native Tibetans at 4,300 m (2.24 ±0.56 W/kg). The superior work capacity in native Tibetans vs. Han Chinese may reflect a better adaptation to life at high altitude. Tibetans at a lower residential altitude of 3,700 m demonstrate a better work capacity than residents at a higher altitude of 4,300 m. The associations between residential altitude and ethnicity with maximal power output could not be fully explained by the measured physiological factors. However, several physiological parameters explained the variance in work capacity, including higher arterial oxygen saturation and higher forced vital capacity.