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Abstract Background Human multipotent mesenchymal stromal cells (MSC) can be isolated from various tissues including bone marrow. Here, MSC participate as bone lining cells in the formation of the hematopoietic stem cell niche. In this compartment, the oxygen tension is low and oxygen partial pressure is estimated to range from 1% to 7%. We analyzed the effect of low oxygen tensions on human MSC cultured with platelet-lysate supplemented media and assessed proliferation, morphology, chromosomal stability, immunophenotype and plasticity. Results After transferring MSC from atmospheric oxygen levels of 21% to 1%, HIF-1α expression was induced, indicating efficient oxygen reduction. Simultaneously, MSC exhibited a significantly different morphology with shorter extensions and broader cell bodies. MSC did not proliferate as rapidly as under 21% oxygen and accumulated in G1 phase. The immunophenotype, however, was unaffected. Hypoxic stress as well as free oxygen radicals may affect chromosomal stability. However, no chromosomal abnormalities in human MSC under either culture condition were detected using high-resolution matrix-based comparative genomic hybridization. Reduced oxygen tension severely impaired adipogenic and osteogenic differentiation of human MSC. Elevation of oxygen from 1% to 3% restored osteogenic differentiation. Conclusion Physiologic oxygen tension during in vitro culture of human MSC slows down cell cycle progression and differentiation. Under physiological conditions this may keep a proportion of MSC in a resting state. Further studies are needed to analyze these aspects of MSC in tissue regeneration.