Post-transcriptional modifications are added to ribosomal RNAs (rRNAs) to govern ribosome biogenesis and to fine-tune protein biosynthesis. RlhA, a dedicated modification enzyme, adds a unique 5-hydroxycytidine (ho5C) at 23S rRNA position 2501 in E. coli and related bacteria. However, the molecular and biological functions as well as the regulation of ho5C2501 remain unclear. We conducted extensive growth curves with the modification-deficient ∆rlhA strain and quantified the extent of the modification during different conditions by mass spectrometry and reverse transcription. The levels of ho5C2501 in E. coli ribosomes turned out to be highly dynamic and growth phase-dependent, with the most effective hydroxylation yields observed in the stationary phase. We demonstrated a direct effect of ho5C2501 on translation efficiencies in vitro and in vivo. High ho5C2501 levels reduced protein biosynthesis which however turned out to be beneficial for E. coli for adapting to oxidative stress. This functional advantage was small under optimal conditions or during heat or cold shock, but becomes pronounced in the presence of hydrogen peroxide. Taken together, these data provided first functional insights into the role of this unique 23S rRNA modification for ribosome functions and bacterial growth under oxidative stress.