Preclinical studies of primary cancer cells are typically done after tumors are removed from patients or animals at ambient atmospheric oxygen (O2, ~21%). However, O2 concentrations in organs are in the ~3 to 10% range, with most tumors in a hypoxic or 1 to 2% O2 environment in vivo. Although effects of O2 tension on tumor cell characteristics in vitro have been studied, these studies are done only after tumors are first collected and processed in ambient air. Similarly, sensitivity of primary cancer cells to anticancer agents is routinely examined at ambient O2. Here, we demonstrate that tumors collected, processed, and propagated at physiologic O2 compared to ambient air display distinct differences in key signaling networks including LGR5/WNT, YAP, and NRF2/KEAP1, nuclear reactive oxygen species, alternative splicing, and sensitivity to targeted therapies. Therefore, evaluating cancer cells under physioxia could more closely recapitulate their physiopathologic status in the in vivo microenvironment.