Oxygen supply is a critical issue in the optimization of in vitro hepatocyte microenvironments. Although several strategies have been developed to balance complex oxygen requirements, these techniques are not able to accurately meet the cellular oxygen demand. Indeed, neither the actual oxygen concentration encountered by cells nor the cellular oxygen consumption rates (OCR) was assessed. The aim of this study is to define appropriate oxygen conditions at the cell level that could accurately match the OCR and allow hepatocytes to maintain liver specific functions in a normoxic environment. Matrigel overlaid rat hepatocytes were cultured on the polydimethylsiloxane (PDMS) membranes under either atmospheric oxygen concentration [20%-O-2 (+)] or physiological oxygen concentrations [10%-O-2 (+), 5%-O-2 (+)], respectively, to investigate the effects of various oxygen concentrations on the efficient functioning of hepatocytes. In parallel, the gas-impermeable cultures (polystyrene) with PDMS membrane inserts were used as the control groups [PS-O-2 (-)]. The results indicated that the hepatocytes under 10%-O-2 (+) exhibited improved survival and maintenance of metabolic activities and functional polarization. The dramatic elevation of cellular OCR up to the in vivo liver rate proposed a normoxic environment for hepatocytes, especially when comparing with PS-O-2 (-) cultures, in which the cells generally tolerated hypoxia. Additionally, the expression levels of 84 drug-metabolism genes were the closest to physiological levels. In conclusion, this study clearly shows the benefit of long-term culture of hepatocytes at physiological oxygen concentration, and indicates on an oxygen-permeable membrane system to provide a simple method for in vitro studies. (c) 2014 American Institute of Chemical Engineers Biotechnol. Prog., 30:1401-1410, 2014