The influence of oxygen concentrations in the gas atmosphere on the development of IVM/IVF bovine embryos was determined by culturing them in a microdrop of modified synthetic oviduct fluid medium supplemented with amino acids, insulin and PVA (mSOFai). After removing the cumulus cells at 18 hr post-insemination, presumptive zygotes were cultured in mSOFai for 104-106 hr under 5% CO₂ with various O₂ concentrations (2.5 to 20%). Reduced O₂ (5-10%) improved the development to the morula stage, and 5% O₂ gave the highest development. In the next experiment, morulae obtained after 102-104 hr of culture, were further cultured for 50 hr in mSOFai with 2 mM glucose under 5 and 20% O₂. An increase in the mean cell number in blastocysts, but not in the frequency of blastocysts, was observed under 5% O₂. In the third experiment, zygotes were cultured for 152-154 hr in mSOFai under 5 and 20% O₂, or cocultured with bovine oviduct epithelial cells in TCM199 + 10% FCS under 5% CO₂ in air. Percentage of blastocysts for mSOFai in 5% O₂ doubled to that for 20% O₂, and was similar to that for coculture. Moreover, mean cell number in the blastocysts for mSOFai in 5% O₂ was significantly higher than that for coculture. Results demonstrate that oxygen concentration critically affects embryonic development through zygotes to blastocysts, and suggest that around 5% O₂ is optimal. It also indicates that bovine zygotes can be cultured up to the blastocyst stage using a chemically defined medium with rates similar to those of a conventional coculture system.