Substitute Matt Green headed a dramatic injury-time winner to keep United's automatic promotion hopes alive.
The Blue Square Premier clash looked like it was heading for a 1-1 draw.
But in the first minute of the four minutes of alloted stoppage time, after a lot of Oxford pressure from long throws and corners, James Constable nodded the ball back following a corner and Green headed in from almost on the goalline.
It was a precious three points, but United were unable to make any ground on leaders Stevenage, who won emphatically at Crawley.
Oxford didn't play that well again, creating few clear-cut chances, but just getting the victory - it was their first win in six games - will do wonders for their confidence.
Constable gave United a 52nd-minute lead but it was cancelled out four minutes later by a controversial equaliser.
United's top scorer showed great determination to shrug off a challenge and rifle the ball in from close-range after Rhys Day flicked on Lewis Chalmers' long throw.
Yet the home team let their guard slip a few minutes later to allow Graeme Armstrong to fire the ball home low from 25 yards.
Yet it was a very questionable goal because the linesman then flagged that it had touched a player who was offside on its way in.
Cue a mass of Gateshead protests, and the referee then went to speak to his assistant, and overruled him, evidently feeling there had been no touch.
United returned to their 4-4-3 formation with plenty of width, Sam Deering on the right and Jamie Cook on the left up front, either side of Constable.
Chalmers was back in the centre of the park as the holding midfielder who could start up attacks with his range of passing.
The U's were having to force the play all the time, with Gateshead content to sit back and see what they could get on the break.
But there was plenty of movement from the home players, and they looked sharp and bright.
Jake Wright made a good challenge when the ball broke towards a visiting striker just inside the area.
A fine pass from Simon Clist free in the first minute and Constable, positgive and direct, advanced with purpose and hit a decent strike, which deflected for a corner.
United's corners posed more threat than in recent games, but they were still finding clear scoring chances hard to come by.
When the ball broke to Cook in the box, he was unable to get any power on his shot.
One of the hardest efforts goalkeeper Paul Farman had to deal with was when his own defender Phil Turnbull deflected a Constable effort, and he had to save high above his head.
Rhys Day rose well at the far post to meet a high Adam Chapman cross, but couldn't direct his header under the bar.
Often United's ball into the box was poor though, Chapman two or three times overhtting his crosses.
Gateshead had their moments too in the first half. Graeme Armstrong got past Wright for a close-range shot that Ryan Clarke blocked by his near post.
And three minutes into the second half, centre back Chris Swailes headed over from five yards when a free-kick was nodded on, Clarke finding himself caught in no-man's land after deciding to come out and not making it to the ball.
The two goals in rapid succession again left the game evenly posed.
United brought on Alfie Potter, and then Matt Green to give themselves no end of attacking options, but the visitors remained stubborn opponents.
And Swailes almost put the north-east side in front when he escaped Constable's marking at a corner, but headed over the bar.
Armstrong similarly went close, when he ran through on the right beyond covering Oxford defenders, but could only hit his shot across the face of the goal.
John Grant came on at the death, and he played his part with a vital header in the run-up to the winning goal, which left Gateshead with a long trip back.
Oxford Utd: Clarke, Chapman, Day (Grant 83), Wright, Tonkin. Bulman (Potter 64), Chalmers, Clist, Deering, Constable, Cook (M Green 75). Subs not used: Turley, Creighton.
Referee: James Adcock (Notts).
Att: 5,986 (52 from Gateshead).
Bookings: Clist, Grant.
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