The mechanism of action of hypoxia on cerebral blood vessels and its role in the regulation of the cerebral circulation were investigated in anesthetized cats. Arterial hypoxia produced marked cerebral arteriolar vasodilation, which was partially reversed by perfusing the space under the cranial window with artificial cerebrospinal fluid (CSF) containing 6-94% oxygen. More marked increase in the local supply of oxygen, via perfusion of the space under the cranial window with fluorocarbon FC-80 equilibrated with 100% oxygen, completely eliminated the vasodilation induced by arterial hypoxia. Fluorocarbon equilibrated with 100% N2 had no effect on the vasodilation. The vasodilation associated with hypotension was completely reversed by perfusion with fluorocarbon equilibrated with 100% oxygen and was unaffected by perfusion with fluorocarbon or CSF equilibrated with gas not containing oxygen. The vasodilation associated with Metrazole-induced seizures was partially reversed by perfusion with fluorocarbon containing oxygen. The results show that hypoxia dilated cerebral blood vessels entirely via a local mechanism, that hypoxia is the dominant mechanism involved in the vasodilation associated with hypotension, and that it is, at least partially, responsible for the vasodilation associated with seizures.