This paper investigates the effects of coflow O-2 level and temperature on diffusion flame of a CH4/H-2 jet in hot coflow (JHC) from a burner system similar to that of Dally et al. The coflow O-2 mass fraction (y(O2)*) is varied from 3% to 80% and the temperature (T-cof*) from 1200 K to 1700 K. The Eddy Dissipation Concept (EDC) model with detailed reaction mechanisms GRI-Mech 3.0 is used for all simulations. To validate the modeling, several JHC flames are predicted under the experimental conditions of Dally et al. [Proc. Combust. Inst., 29 (1), 1147-1154 (2002)] and the results obtained match well with the measurements. Results demonstrate that, when y(O2)* decreased, the diffusion combustion is likely to transform from traditional combustion to MILD (Moderate or Intense Low-oxygen Dilution) combustion mode. When T-cof* is higher, the temperature distribution over the whole domain trends to be more uniform. Reducing y(O2)* or T-cof* leads to less production of intermediate species OH and CO. It is worth noting that if y(O2)* is high enough (y(O2)* >80%), increasing y(O2)* does not cause obvious temperature increase.