In vitro maturation (IVM) is a critical step in in vitro bovine embryo production. A number of factors can influence the IVM environment, such as media composition and protein supplementation. Serum and higher O2 tension have been shown to reduce embryo quality; however, little is known about the effects of serum and O2 tension during IVM on embryo quality and development. This study aimed to evaluate the effect of serum and O2 tension on IVM of bovine oocytes. Immature oocytes obtained from slaughterhouse ovaries were randomly distributed in 4 groups of IVM: G1 (n = 253), 0.1% polyvinyl alcohol (PVA) in air; G2 (n = 248), 10% inactivated estrous cow serum (ECS) in air; G3 (n = 270), 0.1% PVA under 5% O2; and G4 (n = 236), 10% ECS under 5% O2. In vitro maturation was performed with TCM-199 culture medium supplemented with 20 μg mL–1 FSH, under 5% CO2 at 38.5°C for 24 h. After maturation, oocytes were in vitro fertilized with 2.0 × 106 sperm mL–1 in Fert TALP medium, supplemented with heparin, for 20 h. Presumptive zygotes were denuded by vortexing and cultured in CR2aa medium with 2.5% fetal calf serum under 5% CO2 and 5% O2 at 38.5°C. Cleavage rate was evaluated 72 h postfertilization, and blastocyst rate and total cell number were evaluated 8 days postfertilization. Morphological classification of embryos was performed at Day 8 according to the International Embryo Transfer Society manual (1998). Cleavage, blastocyst, and grade 1 embryo rates were analyzed by chi-square, and total cell number was analyzed by ANOVA, with means compared by LSD. Results are presented as mean ± SEM. There was no difference (P > 0.05) in cleavage rates among G1, G2, and G4 (61.6, 65.3, and 57.6%, respectively), but cleavage rate was lower (P < 0.05) in G3 (52.5%). Blastocyst rates among G1, G3, and G4 (15.8, 17.7, and 20.3%, respectively) were similar (P > 0.05). However, blastocyst rate in G2 (25.0%) was higher (P < 0.05) than in G1 and G3, but was similar to G4 (P > 0.05). Total cell number was similar (P > 0.05) among G2 (194.1 ± 13.1), G3 (173.3 ± 9.0), and G4 (163.8 ± 8.7), but was lower (P < 0.05) in G1 (124.5 ± 11.4). The grade 1 embryo rate was lower (P < 0.05) in G1 (70.3%) than in G2 (89.5%), but was similar (P > 0.05) to G3 (77.0%) and G4 (83.9%). The results suggest that IVM with PVA in TCM-199 medium under 5% O2 can be performed without reducing embryo development and quality, when compared with ECS. On the other hand, oocyte developmental competence seems to be affected when IVM is performed with PVA under air conditions. Financial support: CNPq, FAPEMIG.