Incubation in severe hypoxia (1% oxygen) increased the number of erythroid bursts generated from full-term CD34+, or premature mononucleated, human cord blood (CB) cells, in semisolid cultures containing stem cell factor (SCF), interleukin (IL)-3 and erythropoietin (EPO). Severe hypoxia also enhanced the maintenance of erythroid burst-forming units (BFU-E) in CB cell liquid cultures. These positive effects of hypoxia on the maintenance and cloning efficiency of BFU-E did not extend to the other progenitors assayed. Hypoxia, on the other hand, markedly reduced the size and level of hemoglobinization of bursts and, in liquid cultures, suppressed the growth factor-stimulated numerical increase in BFU-E and inhibited the expression of CD36, a marker of erythroid colony-forming units and maturing erythroid precursors. However, when transferred to clonal assays incubated in air, cells from liquid cultures incubated in hypoxia or in air generated fully expanded and hemoglobinized bursts, suggesting that in hypoxia the clonogenic potential of BFU-E was maintained and the development of erythroid clones reversibly inhibited. These results indicate that hypoxia inversely regulates two subsequent phases of erythropoiesis, i.e., it enhances the maintenance of BFU-E and the early development of erythroid clones but inhibits the terminal expansion and maturation of these clones. The cloning of CB cells selected for CD34 positivity, when compared with that of the total population of mononucleated CB cells, revealed that the early development of erythroid bursts was either hypoxia-enhanced or hypoxia-insensitive, reflecting the existence of two different types of BFU-E. Hypoxia-enhanced BFU-E are relatively immature, are maintained in hypoxia but not in air, and account for a large part of CD34+ BFU-E and for a high percentage of the BFU-E in premature CB. Hypoxia-insensitive BFU-E are mostly CD34- and are largely predominant in full-term CB, and most probably correspond to a more mature type of BFU-E.