To understand the mechanisms of ceramide-based responses to hypoxia, we performed a mass spectrometry-based survey of ceramide species elicited by a wide range of hypoxic conditions (0.2-5% oxygen). We describe a rapid, time-dependent, marked up-regulation of dihydroceramides (DHCs) in mammalian cells and in the lungs of hypoxic rats. The increase affected all DHC species and was proportional with the depth and duration of hypoxia, ranging from 2- (1 h) to 10-fold (24 h), with complete return to normal after 1 h of reoxygenation at the expense of increased ceramides. We demonstrate that a DHC-based response to hypoxia occurs in a hypoxia-inducible factor-independent fashion and is catalyzed by the DHC desaturase (DEGS) in the de novo ceramide pathway. Both the impact of hypoxia on DHC molecular species and its inhibitory effect on cell proliferation were reproduced by knockdown of DEGS1 or DEGS2 by siRNA during normoxia. Conversely, overexpression of DEGS1 or DEGS2 attenuated the DHC accumulation and increased cell proliferation during hypoxia. Based on the amplitude and kinetics of DHC accumulation, the enzymatic desaturation of DHCs fulfills the criteria of an oxygen sensor across physiological hypoxic conditions, regulating the balance between biologically active components of ceramide metabolism.