In aerobic organisms, oxygen is a critical factor in tissue and organ morphogenesis from embryonic development throughout post-natal life, as it regulates various intracellular pathways involved in cellular metabolism, proliferation, survival and fate. In the mammalian central nervous system, oxygen plays a critical role in regulating the growth and differentiation state of neural stem cells (NSCs), multipotent neuronal precursor cells that reside in a particular microenvironment called the neural stem cell niche and that, under certain physiological and pathological conditions, differentiate into fully functional mature neurons, even in adults. In both experimental and clinical settings, oxygen is one of the main factors influencing NSCs. In particular, the physiological condition of mild hypoxia (2.5-5.0% O(2)) typical of neural tissues promotes NSC self-renewal; it also favors the success of engraftment when in vitro-expanded NSCs are transplanted into brain of experimental animals. In this review, we analyze how O(2) and specifically hypoxia impact on NSC self-renewal, differentiation, maturation, and homing in various in vitro and in vivo settings, including cerebral ischemia, so as to define the O(2) conditions for successful cell replacement therapy in the treatment of brain injury and neurodegenerative diseases.