Sustained central hypoxia predisposes individuals to dementias such as Alzheimer's disease, in which cells are destroyed in part by disruption of Ca2+ homeostasis. Here, we show that exposure of astrocytes to hypoxia in vitro causes inhibition of plasmalemmal Na+/Ca2+ exchange and excessive mitochondrial Ca2+ loading. Both factors disrupt normal agonist-evoked Ca2+ signalling. Moreover, hypoxia increases the levels of presenilin-1, a major component of a key enzyme involved in Alzheimer's disease. Inhibition of this enzyme partially reverses the effects of hypoxia on Ca2+ signalling. These findings provide an initial cellular basis for understanding the clinical association of hypoxia with Alzheimer's disease.