Oxygen saturation imaging has potential in several preclinical and clinical applications. Dual-wavelength LED array-based photoacoustic oxygen saturation imaging can be an affordable solution in this case. For the translation of this technology, there is a need to improve its accuracy and validate it against ground truth methods. We propose a fluence compensated oxygen saturation imaging method, utilizing structural information from the ultrasound image, and prior knowledge of the optical properties of the tissue with a Monte-Carlo based light propagation model for the dual-wavelength LED array configuration. We then validate the proposed method with oximeter measurements in tissue-mimicking phantoms. Further, we demonstrate in vivo imaging on small animal and a human subject. We conclude that the proposed oxygen saturation imaging can be used to image tissue at a depth of 6–8 mm in both preclinical and clinical applications.