High rates of stem cell proliferation are important in regenerative medicine and in stem cell banking for clinical use. Ambient oxygen tensions (21% O2) are normally used for in vitro culture, but physiological levels in vivo range between 3% and 6% O2. We compared proliferation of human dental pulp stem cells (hDPSCs) cultured under 21% versus 3% O2. The rate of hDPSC proliferation is significantly lower at 21% O2 compared to physiological oxygen levels due to enhanced oxidative stress. Under 21% O2, increased p38 phosphorylation led to activation of p21. Increased generation of reactive oxygen species and p21 led to activation of the NRF-2 signaling pathway. The upregulation of NRF-2 antioxidant defense genes under 21% O2 may interact with cell-cycle-related proteins involved in regulating cell proliferation. Activation of p38/p21/NRF-2 in hDPSCs cultured under ambient oxygen tension inhibits stem cell proliferation and upregulates NRF-2 antioxidant defenses.