Pulmonary arteries (PA) constrict in response to alveolar hypoxia, whereas systemic arteries (SA) undergo dilation. These physiological responses reflect the need to improve gas exchange in the lung, and to enhance the delivery of blood to hypoxic systemic tissues. An important unresolved question relates to the underlying mechanism by which the vascular cells detect a decrease in oxygen tension and translate that into a signal that triggers the functional response. A growing body of work implicates the mitochondria, which appear to function as O2 sensors by initiating a redox-signaling pathway that leads to the activation of downstream effectors that regulate vascular tone. However, the direction of this redox signal has been the subject of controversy. Part of the problem has been the lack of appropriate tools to assess redox signaling in live cells. Recent advancements in the development of redox sensors have led to studies that help to clarify the nature of the hypoxia-induced redox signaling by reactive oxygen species (ROS). Moreover, these studies provide valuable insight regarding the basis for discrepancies in earlier studies of the hypoxia-induced mechanism of redox signaling. Based on recent work, it appears that the O2 sensing mechanism in both the PA and SA are identical, that mitochondria function as the site of O2 sensing, and that increased ROS release from these organelles leads to the activation of cell-specific, downstream vascular responses.