Oxygen is critical for multicellular existence. Its reduction to water by the mitochondrial electron transport chain helps supply the metabolic demands of human life. The incompletely reduced, reactive oxygen byproducts of this reaction, however, can be quite toxic. In this review, we explore the mechanisms responsible for maintaining oxygen homeostasis and the consequences of their dysfunction. With an eye toward defining clinical care guidelines for the management of critically ill neonates, we present evidence describing the role of physiologic hypoxia during development and the adverse consequences of hyperoxia in-term as well as preterm infants.