The process of sensing, transducing, and acting on environmental cues is critical to normal physiologic function. Furthermore, dysfunction of this process can lead to the development of disease. This is especially true of the homeostatic mechanisms that have evolved to maintain the carriage of O2 to respiring tissues during acute hypoxic challenge. During periods of reduced O2 availability, three major mechanisms act conjointly to increase ventilation and optimize the ventilation-perfusion ratio throughout the lung by directing pulmonary blood flow to better ventilated areas of the lung. These mechanisms are as follows: (1) increased carotid sinus nerve discharge rate to the respiratory centers of the brain, (2) intrinsic hypoxic vasoconstriction of pulmonary resistance vessels, and (3) potential local and central modulation via stimulation of neuroepithelial bodies of the lung. The key to the rapid response to the O2 signal is the ability of each of these tissues to sense acutely the changes in PO2, to transduce the signal, and for cellular effectors to initiate compensatory mechanisms that will offset rapidly the reduction in PO2 before O2 availability to tissues is compromised. This review concentrates on the signal transduction mechanism that links altered PO2 to depolarization in the recently proposed airway chemosensory element, the neuroepithelial body (and its immortalized cellular counterpart, the H146 cell line), and discusses the pertinent similarities and differences that exist between airway, carotid body, and pulmonary arteriolar O2 sensing.