Ewing sarcoma (ES) is an aggressive malignancy driven by an oncogenic fusion protein, EWS-FLI1. Neuropeptide Y (NPY), and two of its receptors, Y1R and Y5R are up-regulated by EWS-FLI1 and abundantly expressed in ES cells. Paradoxically, NPY acting via Y1R and Y5R stimulates ES cell death. Here, we demonstrate that these growth-inhibitory actions of NPY are counteracted by hypoxia, which converts the peptide to a growth-promoting factor. In ES cells, hypoxia induces another NPY receptor, Y2R, and increases expression of dipeptidyl peptidase IV (DPPIV), an enzyme that cleaves NPY to a shorter form, NPY3-36. This truncated peptide no longer binds to Y1R and, therefore, does not stimulate ES cell death. Instead, NPY3-36 acts as a selective Y2R/Y5R agonist. The hypoxia-induced increase in DPPIV activity is most evident in a population of ES cells with high aldehyde dehydrogenase (ALDH) activity, rich in cancer stem cells (CSCs). Consequently, NPY, acting via Y2R/Y5Rs, preferentially stimulates proliferation and migration of hypoxic ALDHhigh cells. Hypoxia also enhances the angiogenic potential of ES by inducing Y2Rs in endothelial cells and increasing the release of its ligand, NPY3-36, from ES cells. In summary, hypoxia acts as a molecular switch shifting NPY activity away from Y1R/Y5R-mediated cell death and activating the Y2R/Y5R/DPPIV/NPY3-36 axis, which stimulates ES CSCs and promotes angiogenesis. Hypoxia-driven actions of the peptide such as these may contribute to ES progression. Due to the receptor-specific and multifaceted nature of NPY actions, these findings may inform novel therapeutic approaches to ES.