The carotid bodies (CB) are arterial chemoreceptors that by sensing changes of arterial PO2, PCO2 and pH can initiate and modify ventilatory and cardiovascular reflexes in order to maintain PO2, PCO2 and pH within physiological levels. It is now generally accepted that the glomus or type I cells of the CB are the transducers of hypoxic stimuli, and relay chemosensory information to the brainstem via neurotransmitter release at synaptic contacts with afferent terminals of the carotid sinus nerve. This article reviews the mechanisms of the O2-sensing process at the cellular level. We consider first the transduction of the hypoxic stimulus, in which most of the experimental evidence currently favors a mechanism involving modulation of the electrical properties of type I cells. The last part of the article deals with the transmission of the stimulus between type I cells and afferent nerve terminals, and we present an overview on the issue of neurotransmission in the CB, summarizing the actions of the main neurotransmitters present in the organ.