Recent studies have shown that various neural and embryonic stem cells cultured in 1-8% oxygen (O(2)), levels lower than those typically used in cell culture (20.9%), displayed increased rates of proliferation; however, the molecular mechanisms underlying these changes are largely undefined. In this study, using rigorously controlled O(2) levels, we found that neural stem cells (NSCs) from embryonic day 15 rat cortex increased their rate of proliferation and migration in 1% O(2) relative to 20% O(2) without changes in viability. We sought to identify molecular changes in NSCs grown in 1% O(2) that might account for these increases. In 1% O(2), levels of the hypoxia-inducible transcription factor HIF-1α were transiently increased. Reduced adherence of NSCs in 1% O(2) to basement membrane-coated plates was observed, and quantitative RT-PCR analysis confirmed that the levels of mRNA for an assortment of cell adhesion and extracellular matrix molecules were altered. Most notable was a 5-fold increase in matrix metalloproteinase (MMP)-9 mRNA. Specific inhibition of MMP-9 activity, verified using a fluorescent substrate assay, prevented the increase in proliferation and migration in 1% O(2). The canonical Wnt pathway was recently shown to be activated in stem cells in low O(2) via HIF-1α. Inhibition of Wnt signaling by DKK-1 also prevented the increase in proliferation, migration, and MMP-9 expression. Thus, MMP-9 is a key molecular effector, downstream of HIF-1α and Wnt activation, responsible for increased rates of NSC proliferation and migration in 1% O(2).