The carotid body (CB) is a neural crest-derived organ whose function is to elicit hyperventilation in response to hypoxemia. The CB contains clusters of neuron-like glomus cells enveloped by glia-like sustentacular cells. CB responsiveness to acute hypoxia relies on the inhibition of O2-sensitive K+ channels in glomus cells, which leads to depolarization, Ca2+ entry and release of transmitters that activate afferent nerve fibers. The molecular mechanisms underlying K+ channel modulation by O2 tension are unknown. Putative hypoxia-sensing mechanisms can be studied in detail using genetically modified mice in conjunction with a thin carotid body slice preparation. We discuss here the role in CB oxygen sensing of the hypoxia-inducible factor 1alpha, the mitochondrial complex II subunit D, and heme oxygenase 2. In chronic hypoxia the CB grows with increase in glomus cell number. We identified CB stem cells of glial lineage, which can differentiate into functionally normal glomus cells.