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We investigated the effect of oxygen content on the microstructural and magnetic properties of a DyH2 dip-coated Nd–Fe–B sintered magnet. When the magnet had a low oxygen content (1500 ppm), the volume and size of the rare-earth-rich oxide (Nd–Dy–O) phase was reduced, and a uniform and continuous thin Nd-rich grain boundary phase (GBP) was well developed. The grain boundary diffusion depth of Dy increased from 200 to 350 μm with decreasing oxygen content from ∼3000 to 1500 ppm. The coercivity of the low-oxygen magnet increased from 19.98 to 23.59 kOe after grain boundary diffusion process (GBDP) while the remanence reduction was minimized. The formation of an fcc-NdOx Nd-rich phase in the high-oxygen magnet hindered the formation of a Nd-rich triple-junction phase and GBP. In contrast, a metallic dhcp-Nd phase, which was closely related to coercivity enhancement after GBDP, was formed in the low-oxygen magnet.