Microenvironmental oxygen (O₂) regulates stem cell activity, and a hypoxic niche with low oxygen levels has been reported in multiple stem cell types. Satellite cells are muscle-resident stem cells that maintain the homeostasis and mediate the regeneration of skeletal muscles. We demonstrate here that hypoxic culture conditions favor the quiescence of satellite cell-derived primary myoblasts by upregulating Pax7, a key regulator of satellite cell self-renewal, and downregulating MyoD and myogenin. During myoblast division, hypoxia promotes asymmetric self-renewal divisions and inhibits asymmetric differentiation divisions without affecting the overall rate of proliferation. Mechanistic studies reveal that hypoxia activates the Notch signaling pathway, which subsequently represses the expression of miR-1 and miR-206 through canonical Hes/Hey proteins, leading to increased levels of Pax7. More importantly, hypoxia conditioning enhances the efficiency of myoblast transplantation and the self-renewal of implanted cells. Given the robust effects of hypoxia on maintaining the quiescence and promoting the self-renewal of cultured myoblasts, we predict that oxygen levels in the satellite cell niche play a central role in precisely balancing quiescence versus activation, and self-renewal versus differentiation, in muscle stem cells in vivo.