The aim of this chapter is to review current evidence in regard to the function of pulmonary Neuroepithelial bodies (NEB’s) as hypoxia sensitive airway sensors in mammalian lungs. Typical NEB’s form clusters of innervated amine (serotonin, 5-HT) and peptide (i.e. bombesin, CGRP) producing cells widely distributed within the airway epithelium, with preferential location at airway branch points. Recent electrophysiological studies using the patch-clamp technique have demonstrated that NEB cells are transducers of hypoxia stimulus via a membrane bound molecular complex (”oxygen sensor”), characteristic of specialized cells that monitor and signal hypoxia in the body to maintain homeostasis. The O2 sensor in NEB cells has been partially characterized and consists of an H2O2 producing, multicomponent NADPH oxidase coupled to O2 sensitive K+ current. Under normoxia, H2O2 derived from the oxidase promotes K+ channel open state activity, whereas during hypoxia reduction in H2O2 leads to K+ channel closure, membrane depolarization and release of amine/peptide neurotransmitters. Studies of native NEB cells after isolation and culture or in fresh lung slices, related tumor cell line and k/o mouse models are reviewed focusing on cellular, molecular and electrophysiological approaches. The expression and function of the various components of “phagocytic” NADPH oxidase (gp91phox/NOX 2), recently identified NOX homologues and their possible role in O2 sensing is discussed. The mechanisms of chemotransmission of hypoxia and other stimuli from NEB cells to the brain stem via nodose neuron derived vagal afferents are reviewed. The functional role of NEB, particularly the possible involvement in control of respiration during neonatal adaptation and various perinatal disease processes is discussed. This chapter discusses advances in cellular and molecular biology of neuroepithelial body (NEB), their possible function as airway O2 sensors, particularly during neonatal adaptation and their potential involvement in a variety of perinatal disorders. The candidate neurotransmitters that mediate fast chemosensory transmission of hypoxia signal from NEB cells to central nervous system via vagal sensory afferents include 5-hydroxytryptamin, acetylcholine and adenosine triphosphate, as proposed for the carotid body glomus cells. In preliminary experiments it was found that nodose ganglion (NG) neurons when cultured alone showed no action potential discharges upon hypoxia exposure, however when NEB cells and NG neurons were cultured together it was observed hypoxia induced depolarization and/or increased spike discharge from NG neurons closely associated with NEB cells, indicating the presence of functional synapses. The precise role and function of NEB under normal condition and in various pulmonary disorders remains largely unknown.