Neural stem cells (NSCs) constitute a promising source of cells for transplantation in Parkinson's disease (PD), but protocols for controlled dopaminergic differentiation are not yet available. Here we investigated the influence of oxygen on dopaminergic differentiation of human fetal NSCs derived from the midbrain and forebrain. Cells were differentiated for 10 days in vitro at low, physiological (3%) versus high, atmospheric (20%) oxygen tension. Low oxygen resulted in upregulation of vascular endothelial growth factor and increased the proportion of tyrosine hydroxylase-immunoreactive (TH-ir) cells in both types of cultures (midbrain: 9.1 ± 0.5 and 17.1 ± 0.4 (P<0.001); forebrain: 1.9 ± 0.4 and 3.9 ± 0.6 (P<0.01) percent of total cells). Regardless of oxygen levels, the content of TH-ir cells with mature neuronal morphologies was higher for midbrain as compared to forebrain cultures. Proliferative Ki67-ir cells were found in both types of cultures, but the relative proportion of these cells was significantly higher for forebrain NSCs cultured at low, as compared to high, oxygen tension. No such difference was detected for midbrain-derived cells. Western blot analysis revealed that low oxygen enhanced ß-tubulin III and GFAP expression in both cultures. Up-regulation of ß-tubulin III was most pronounced for midbrain cells, whereas GFAP expression was higher in forebrain as compared to midbrain cells. NSCs from both brain regions displayed less cell death when cultured at low oxygen tension. Following mictrotransplantation into mouse striatal slice cultures predifferentiated midbrain NSCs were found to proliferate and differentiate into substantial numbers of TH-ir neurons with mature neuronal morphologies, particularly at low oxygen. In contrast, predifferentiated forebrain NSCs microtransplanted using identical conditions displayed little proliferation and contained few TH-ir cells, all of which had an immature appearance. Our data may reflect differences in dopaminergic differentiation capacity and region-specific requirements of NSCs, with the dopamine-depleted striatum cultured at low oxygen offering an attractive micro-environment for midbrain NSCs.