It has recently been reported that hypoxia promotes the survival and proliferation of neural stem cells (NSCs). In the present study, we examine the differentiation ability of neural precursors expanded under lowered oxygen conditions, and the potential role of hypoxia-inducible factor (HIF)-1αin vitro, which is the key molecule in response to lowered oxygen. The NSCs were cultured in a 3% O2 environment for 3 days, and differentiated with 1% fetal bovine serum (FBS) for another 5–7 days, and the cell lineage was evaluated by immunohistochemistry, flow cytometry and HPLC. Compared with the normal condition, the NSCs cultured in hypoxia (3% O2) displayed an increase in the percentage of neurons. Especially the percentage of TH-positive neurons differentiated from NSCs in lowered oxygen increased significantly; the dopamine (DA) content in the medium was higher than under normal conditions. These data indicate that lowered oxygen favors dopaminergic differentiation. We then examined the expression of HIF-1α during differentiation of NSCs. The levels of HIF-1α mRNA expression under 3% oxygen did not change as compared with those under normal conditions. However, HIF-1α protein expression was higher from 3 to 72 h during hypoxia than under normal conditions. Overexpression of HIF-1α significantly increased the number of TH-positive cells and the DA content in culture medium under normal conditions. These results suggest that HIF-1α is involved in the regulation of dopaminergic differentiation of NSCs in lowered oxygen. This study may also offer a new approach to yield DA neurons using a physical factor.