We recently reported the isolation of a unique subpopulation of human stromal cells from bone marrow (BM) termed marrow-isolated adult multilineage inducible (MIAMI) cells, capable of differentiating in vitro into mature-like cells from all three germ layers. The oxygen tension (pO2) in BM ranges from 1 to 7%, which prompted us to examine the role of pO2 in regulating the capacity of MIAMI cells both to self-renew and maintain their pluripotentiality (stemness) or to progress toward osteoblastic differentiation. MIAMI cells were grown under low-pO2 conditions (1, 3, 5, and 10% oxygen) or air (21% oxygen). The proliferation rate of cells exposed to 3% oxygen (3 days) increased, resulting in cell numbers more than threefold higher than those of cells exposed to air (at 7 days). In cells grown under osteoblastic differentiation conditions, the expression of the osteoblastic markers osteocalcin, bone sialoprotein, osterix, and Runx2 and alkaline phosphatase activity was upregulated when incubated in air; however, it was blocked at low (3%) pO2. Similarly, biomineralization of long-term cell cultures was high under osteoblastic differentiation conditions in air but was undetectable at low (3%) pO2. In contrast, low pO2 upregulated mRNAs for OCT-4, REX-1, telomerase reverse transcriptase, and hypoxia-inducible factor-1 alpha, and increased the expression of SSEA-4 compared to air. Moreover, the expression of embryonic stem cell markers was sustained even under osteogenic culture conditions. Similar results were obtained using commercially available marrow stromal cells. We hypothesize a physiological scenario in which primitive MIAMI cells self-renew while localized to areas of low pO2 in the bone marrow, but tend to differentiate toward osteoblasts when they are located closer to blood vessels and exposed to higher pO2. Our results strongly suggest that maintaining developmentally primitive human cells in vitro at low pO2 would be more physiological and favor stemness over differentiation.