Isolated neural crest stem cells (NCSCs) differentiate to autonomic neurons in response to bone morphogenetic protein 2 (BMP2) in clonal cultures, but these neurons do not express sympathoadrenal (SA) lineage markers. Whether this reflects a developmental restriction in NCSCs or simply inappropriate culture conditions was not clear. We tested the growth and differentiation potential of NCSCs at approximately 5% O(2), which more closely approximates physiological oxygen levels. Eighty-three percent of p75(+)P(0-) cells isolated from embryonic day 14.5 sciatic nerve behaved as stem cells under these conditions, suggesting that this is a nearly pure population. Furthermore, addition of BMP2 plus forskolin in decreased oxygen cultures elicited differentiation of thousands of cells expressing tyrosine hydroxylase, dopamine-beta-hydroxylase, and the SA lineage marker SA-1 in nearly all colonies. Such cells also synthesized and released dopamine and norepinephrine. These data demonstrate that isolated mammalian NCSCs uniformly possess SA lineage capacity and further suggest that oxygen levels can influence cell fate. Parallel results indicating that reduced oxygen levels can also promote the survival, proliferation, and catecholaminergic differentiation of CNS stem cells (Studer et al., 2000) suggests that neural stem cells may exhibit a conserved response to reduced oxygen levels.