In aquatic vertebrates, hypoxia induces physiological changes that arise principally from O(2) chemoreceptors of the gill. Neuroepithelial cells (NECs) of the zebrafish gill are morphologically similar to mammalian O(2) chemoreceptors (e.g. carotid body), suggesting that they may play a role in initiating the hypoxia response in fish. We describe morphological changes of zebrafish gill NECs following in vivo exposure to chronic hypoxia, and characterize the cellular mechanisms of O(2) sensing in isolated NECs using patch-clamp electrophysiology. Confocal immunofluorescence studies indicated that chronic hypoxia (P(O(2)) = 35 mmHg, 60 days) induced hypertrophy, proliferation and process extension in NECs immunoreactive for serotonin or synaptic vesicle protein (SV2). Under voltage clamp, NECs responded to hypoxia (P(O(2)) = 25-140 mmHg) with a dose-dependent decrease in K(+) current. The current-voltage relationship of the O(2)-sensitive current (I(KO(2))) reversed near E(K) and displayed open rectification. Pharmacological characterization indicated that I(KO(2)) was resistant to 20 mM tetraethylammonium (TEA) and 5 mM 4-aminopyridine (4-AP), but was sensitive to 1 mm quinidine. In current-clamp recordings, hypoxia produced membrane depolarization associated with a conductance decrease; this depolarization was blocked by quinidine, but was insensitive to TEA and 4-AP. These biophysical and pharmacological characteristics suggest that hypoxia sensing in zebrafish gill NECs is mediated by inhibition of a background K(+) conductance, which generates a receptor potential necessary for neurosecretion and activation of sensory pathways in the gill. This appears to be a fundamental mechanism of O(2) sensing that arose early in vertebrate evolution, and was adopted later in mammalian O(2) chemoreceptors.