Oxygen (O₂) is a substrate for energy production in the cell and is a rapid regulator of cellular metabolism. Recent studies have also implicated O₂ and its signal transduction pathways in controlling cell proliferation, fate, and morphogenesis during the development of many tissues, including the nervous system. O₂ tensions in the intact brain are much lower than in room air, and there is evidence that dynamic control of O₂ availability may be a component of the in vivo neural stem cell (NSC) niche. At lower O₂ tensions, hypoxia‐inducible factor 1α (HIF1α) facilitates signal transduction pathways that promote self‐renewal (e.g., Notch) and inhibits pathways that promote NSC differentiation or apoptosis (e.g., bone morphogenetic proteins). Increasing O₂ tension degrades HIF1α, thus promoting differentiation or apoptosis of NSCs and progenitors. These dynamic changes in O₂ tension can be mimicked to optimize ex vivo production methods for cell replacement therapies. Conversely, disrupted O₂ availability may play a critical role in disease states such as stroke or brain tumor progression. Hypoxia during stroke activates precursor proliferation in vivo, while glioblastoma stem cells proliferate maximally in a more hypoxic environment than normal stem cells, which may make them resistant to certain anti‐neoplastic therapies. These findings suggest that O₂ response is central to the normal architecture and dynamics of NSC regulation and in the etiology and treatment of brain diseases. J. Cell. Physiol. 220: 562–568, 2009. © 2009 Wiley‐Liss, Inc.