Maternal hypoxia inhibits cell proliferation in the heart of fetal and neonatal rats. This study determined the direct effect of hypoxia on cardiomyocyte proliferation in fetal rat hearts. Isolated hearts of day 17 fetal rats and rat embryonic ventricular myocyte H9c2 cells were treated ex vivo with 21% or 1% O2 for 48 or 24 h. Bromodeoxyuridine (BrdU) and Ki‐67 were examined by immunohistochemistry (IHC) and immunofluorescence (IF), respectively. The expression of tissue inhibitors of metalloproteinases (TIMP) −3 & −4, cell division marker cyclin D2 and cell division inhibitor p27 was measured by Western blots. IHC staining indicated decreased numbers of BrdU positive nuclei in hypoxic‐treated fetal hearts. Analysis of double IF revealed a predominant distribution of Ki‐67 in cardiomyocytes in fetal hearts, and hypoxia caused a reduction of Ki‐67 colocalization with cardiomytocytes. In accordance, decreased Ki‐67 positive nuclei were demonstrated in H9c2 cells under the hypoxic condition. Cyclin D2 was decreased in hypoxic fetal hearts and H9c2 cells. In contrast, hypoxia enhanced the expression of p27, TIMP‐3 and TIMP‐4 in fetal hearts and H9c2 cells. The results suggest that hypoxia has direct inhibitory effect on cardiomyocyte proliferation in the developing heart, which may be mediated by the upregulation of TIMP‐3 and/or TIMP‐4. (Supported in part by NIH grants HL82779 and HL83966).