Induced hepatic stem cells (iHepSCs) have great potential as donors for liver cell therapy due to their self-renewal and bipotential differentiation properties. However, the efficiency of bidifferentiation and repopulation efficiency of iHepSCs is relatively low. Recent evidence shows that physiological hypoxia, a vital factor within stem cell “niche” microenvironment, plays key roles in regulating tissue stem cell biological behaviors including proliferation and differentiation. In this study, we found that physiological hypoxia (10% O₂) enhanced the stemness properties and promoted the proliferation ability of iHepSCs by accelerating G1/S transition via p53-p21 signaling pathway. In addition, short-term hypoxia preconditioning improved the efficiency of hepatic differentiation of iHepSCs, and long-term hypoxia promoted cholangiocytic differentiation but inhibited hepatic differentiation of iHepSCs. These results demonstrated the potential effects of hypoxia on stemness preservation, proliferation, and bidifferentiation of iHepSCs and promising perspective to explore appropriate culture conditions for therapeutic stem cells.