Pulmonary neuroepithelial bodies, composed of innervated clusters of amine- and peptide-containing cells, are widely distributed throughout the airway mucosa of human and animal lungs. Structurally, neuroepithelial bodies resemble chemoreceptors (such as carotid body, taste buds) and are thought to function as hypoxia sensitive airway sensors. Evidence for this is indirect, however, and the mechanism of oxygen sensing by these cells is unknown. Here we culture neuroepithelial bodies isolated from rabbit fetal lungs and identify voltage-activated potassium, calcium and sodium currents using the whole-cell patch clamp technique. Upon exposure to hypoxia there is a reversible reduction (25-30%) in the outward potassium current, with no change in inward currents. In addition, we demonstrate the expression of an oxygen-binding protein (b-cytochrome, NADPH oxidase) on the plasma membrane of these cells. The identification of an oxygen-sensing mechanism (namely the presence of an O2-sensitive potassium channel coupled to an O2 sensor protein) in the cells of pulmonary neuroepithelial bodies indicates that they are transducers of the hypoxia stimulus and hence may function as airway chemoreceptors in the regulation of respiration.