Low-oxygen tension is an important component of the stem cell microenvironment. In rodents, renal resident stem cells have been described in the papilla, a relatively hypoxic region of the kidney. In the present study, we found that CD133(+) cells, previously described as renal progenitors in the human cortex, were enriched in the renal inner medulla and localized within the Henle's loop and thin limb segments. Once isolated, the CD133(+) cell population expressed renal embryonic and stem-related transcription factors and was able to differentiate into mature renal epithelial cells. When injected subcutaneously in immunodeficient mice within Matrigel, CD133(+) cells generated canalized structures positive for renal specific markers of different nephron segments. Oct4A levels and differentiation potential of papillary CD133(+) cells were higher than those of CD133(+) cells from cortical tubuli. Hypoxia was able to promote the undifferentiated phenotype of CD133(+) progenitors from papilla. Hypoxia stimulated clonogenicity, proliferation, vascular endothelial growth factor synthesis, and expression of CD133 that were in turn reduced by epithelial differentiation with parallel HIF-1α downregulation. In addition, hypoxia downregulated microRNA-145 and promoted the synthesis of Oct4A. Epithelial differentiation increased microRNA-145 and reduced Oct4 level, suggesting a balance between Oct4 and microRNA-145. MicroRNA-145 overexpression in CD133(+) cells induced downrelation of Oct4A at the protein level, inhibited cell proliferation, and stimulated terminal differentiation. This study underlines the role of the hypoxic microenvironment in controlling the proliferation and maintaining a progenitor phenotype and stem/progenitor properties of CD133(+) cells of the nephron. This mechanism may be at the basis of the maintenance of a CD133(+) population in the papillary region and may be involved in renal regeneration after injury.