Intact unanesthetized cats hyperventilate in response to hypocapnic hypoxia in both wakefulness and sleep. This hyperventilation is caused by increases in diaphragmatic activity during inspiration and expiration. In this study, we recorded 120 medullary respiratory neurons during sleep in hypoxia. Our goal was to understand how these neurons change their activity to increase breathing efforts and frequency in response to hypoxia. We found that the response of medullary respiratory neurons to hypoxia was variable. While the activity of a small majority of inspiratory (58%) and expiratory (56%) neurons was increased in response to hypoxia, the activity of a small majority of pre-inspiratory (57%) neurons was decreased. Cells that were more active in hypoxia had discharge rates that averaged 183% (I dec), 154% (I aug), 155% (I), 230% (E dec), 191% (E aug) and 136% (E) of the rates in normoxia. The response to hypoxia was similar in NREM and REM sleep. Additionally, changes in the profile of activity were observed in all cell types examined. These changes included advanced, prolonged and abbreviated patterns of activity in response to hypoxia; for example, some inspiratory neurons prolonged their discharge into expiration during the postinspiratory period in hypoxia but not in normoxia. Although changes in activity of the inspiratory neurons could account for the increased breathing efforts and activity of the diaphragm observed during hypoxia, the mechanisms responsible for the change in respiratory rate were not revealed by our data.