Mesenchymal stem cells within the stromal-vascular fraction of subcutaneous adipose tissue (i.e., adipose-derived stem cells (ASCs)), have been used for tissue engineering. In addition to serving a building-block function, ASCs are reported to secrete growth factors that are essential for their function. Increasing evidence indicates that ASCs play a significant role in skin regeneration, a function that is enhanced by hypoxia through upregulating secretion of growth factors. Although the anatomical sites of ASCs in the body are relatively oxygen-deficient, ASCs are usually cultured under normoxic conditions (i.e., atmospheric oxygen levels). Culturing ASCs under physiologically relevant low-oxygen-tension conditions may uniquely benefit the expansion, differentiation, adhesion, growth factor secretion and regenerative potential of ASCs. Therefore, understanding the response and adaptation of ASCs to hypoxia may be invaluable for developing novel cell- and cyto-therapy strategies. This review highlights our current understanding of cellular and molecular responses of ASCs to hypoxia, focusing on the enhancement of ASC function and secretory activity by hypoxic culture conditions.