Oxygen is a potent modulator of cell function and wound repair in vivo. The lack of oxygen (hypoxia) can create a potentially lethal environment and limit cellular respiration and growth or, alternatively, enhance the production of the specific extracellular matrix components and increase angiogenesis through the hypoxia-inducible factor-1 pathway. For the in vitro generation of clinically relevant tissue-engineered grafts, these divergent actions of hypoxia should be addressed. Diffusion through culture medium and tissue typically limits oxygen transport in vitro, leading to hypoxic regions and limiting the viable tissue thickness. Approaches to overcoming the transport limitations include culture with bioreactors, scaffolds with artificial microvasculature, oxygen carriers, and hyperbaric oxygen chambers. As an alternate approach, angiogenesis after implantation may be enhanced by incorporating endothelial cells, genetically modified cells, or specific factors (including vascular endothelial growth factor) into the scaffold or exposing the graft to a hypoxic environment just before implantation. Better understanding of the roles of hypoxia will help prevent common problems and exploit potential benefits of hypoxia in engineered tissues.