Neural stem cells (NSCs) are multipotent and widely used in many research fields such as transplantation. Hypoxia not only improves the proliferation of various stem cells in vitro but also plays an important role in the differentiation of stem cells. The aim of the present study was to investigate the effect of hypoxia on the differentiation of NSCs. NSCs were isolated from the midbrain of embryonic Wistar rats (E13.5d), and cultured in serum-free DMEM/F12 medium (containing 20 ng/mL EGF, 20 ng/mL bFGF, 1% N2 and B27). The neurospheres were passaged every 3-5 d, and the third generation of NSCs was used for the following experiments. NSCs were induced under normoxia (20% O2) and hypoxia (3% O2), respectively, for 3 d, and then differentiated under normoxia for 5-7 d (DMEM/F12 medium containing 1% FBS, N2 and B27). Immunohistochemistry of nestin, NeuN and TH was used for NSC identification and differentiation assay. The number of TH-positive cells was evaluated by flow cytometry. Dopamine (DA) content in the supernatant of culture medium was detected by HPLC. The results showed that NSCs could self-renew and were all nestin-positive. NSCs under hypoxic condition differentiated more neurons than those under normoxic condition. The percentage of TH-positive cells differentiated from NSCs under normoxia and hypoxia was (10.25+/-1.03) % and (19.88+/-1.44) %, respectively. In addition, DA content in the supernatant of culture medium in hypoxia group increased significantly, about twice of that in normoxia group (P<0.05, n=8). The results demonstrate that hypoxia (3% O2) promotes the differentiation of NSCs into neurons, especially dopaminergic neurons. It is suggested that hypoxia may be a potential clinical tool to treat Parkinson's disease.