If I upgrade to watch os 10.3.1 on my apple watch ultra 2 will I lose the blood oxygen function?

No, period, you will NOT lose the O2 function. Only Ultra 2 watches sold (by Apple) on or after 1/18/2024 have the O2 function disabled. Some retailers, like Best Buy, have watches in stock that weren’t affected by the legal action. Those too will have the O2 function fully working.

forum83 wrote:

So Apple is checking the date of every ultra 2 before applying a different feature set to the same model using the same watch os.

It’s really quite simple. If the O2 function is currently working on your Ultra 2 it will not be disabled by any update. Any series 9 or Ultra 2 that already has a working O2 function will NOT have the feature disabled in any future updates to watchOS 10. If the feature works now on your watch it will continue to work. You don't need to worry about model numbers or anything else. Let’s not make this complicated.

About Blood Oxygen availability - Apple Support

Check your model number against the model number in the above link.

But unless you got your Apple Watch Ultra after Jan 18th, 2024, then "No" you will not loose the O2 sensor.

Apple is checking the Model number. Apple arranged for Apple Watches they sell after the 18th of January to have a new Model number.

You can look at your Model number via Apple Watch -> Settings -> General -> About.