Olfactory mucosa mesenchymal stem cells (OM-MSCs) display significant clonogenic activity and may be easily propagated for Parkinson's disease therapies. Methods of inducing OM-MSCs to differentiate into dopaminergic (DAergic) neurons using olfactory ensheathing cells (OECs) are thus an attractive topic of research. We designed a hypoxic induction protocol to generate DAergic neurons from OM-MSCs using a physiological oxygen (O) level of 3% and OEC-conditioned medium (OCM; HI group). The normal induction (NI) group was cultured in O at ambient air level (21%). The role of hypoxia-inducible factor-1α (HIF-1α) in the differentiation of OM-MSCs under hypoxia was investigated by treating cells with an HIF-1α inhibitor before induction (HIR group). The proportions of β-tubulin- and tyrosine hydroxylase (TH)-positive cells were significantly increased in the HI group compared with the NI and HIR groups, as shown by immunocytochemistry and Western blotting. Furthermore, the level of dopamine was significantly increased in the HI group. A slow outward potassium current was recorded in differentiated cells after 21 d of induction using whole-cell voltage-clamp tests. A hypoxic environment thus promotes OM-MSCs to differentiate into DAergic neurons by increasing the expression of HIF-1α and by activating downstream target gene TH. This study indicated that OCM under hypoxic conditions could significantly upregulate key transcriptional factors involved in the development of DAergic neurons from OM-MSCs, mediated by HIF-1α. Hypoxia promotes DAergic neuronal differentiation of OM-MSCs, and HIF-1α may play an important role in hypoxia-inducible pathways during DAergic lineage specification and differentiation in vitro.