The prevalence of infertility in Canada has substantially increased over 30 years, and plateaued success rates of culture systems warrant further optimization for transfer outcomes. In clinical programs, embryos commonly undergo extended culture under 5% O2 until the blastocyst stage. The aim of this study is to characterize the developmental competence and stress-related responses of embryos cultured under 5 versus 2% O2 in comparison to in vivo-derived blastocysts. We hypothesized 2% O2 compromises developmental competence through altered embryonic stress responses and induction of apoptosis-related genes relative to those cultured under 5% O2 and in vivo-derived blastocysts. Quantitative measures of development and relative expressions of a cohort of stress-related genes in CD1 mouse zygotes cultured to blastocysts under 5 or 2% O2 were compared to in vivo-derived embryos. Apoptotic responses were evaluated using an immunofluorescence assay for Caspase-3. The mean percentage of blastocysts developed, and total cell number of embryos derived in vivo or cultured under 5% O2 was significantly higher than those cultured under 2% O2. Blastocyst expansion was greatest in embryos cultured under 5% O2. Stress response genes were significantly upregulated in embryos cultured under 2% O2, and expression of antioxidant-related genes was significantly lower in cultured versus in vivo-derived embryos. Caspase-3 immunofluorescence was significantly higher in cultured embryos versus in vivo-derived embryos. We inferred that 5% O2 systems better approximate physiologic oxygen availability for culture of mouse embryos, warranting re-evaluation of culturing embryos under threshold or sub-physiologic oxygen concentrations during clinical IVF programs.