Molecular oxygen has long been recognized as a powerful radiosensitizer that enhances the cell-killing efficiency of ionizing radiation. Radiosensitization by oxygen occurs at very low concentrations with the half-maximum radiosensitization at approximately 3 mmHg. However, robust hypoxia-induced signal transduction can be induced at <15 mmHg and can elicit a wide range of cellular responses that will affect therapy response as well as malignant progression. Great strides have been made, especially since the 1990s, toward identification and characterization of the oxygen-regulated molecular pathways that affect tumor response to ionizing radiation. In this review, we will discuss the current advances in our understanding of oxygen-dependent molecular modification and cellular signal transduction and their impact on tumor response to therapy. We will specifically address mechanistic distinctions between radiobiological hypoxia (0–3 mmHg) and pathological hypoxia (3–15 mmHg). We also propose a paradigm that hypoxia increases radioresistance by maintaining the cancer stem cell phenotype.