Hematopoietic stem cells (HSCs) reside in hypoxic niches within bone marrow and cord blood. Yet, essentially all HSC studies have been performed with cells isolated and processed in non-physiologic ambient air. By collecting and manipulating bone marrow and cord blood in native conditions of hypoxia, we demonstrate that brief exposure to ambient oxygen decreases recovery of long-term repopulating HSCs and increases progenitor cells, a phenomenon we term extraphysiologic oxygen shock/stress (EPHOSS). Thus, true numbers of HSCs in the bone marrow and cord blood are routinely underestimated. We linked ROS production and induction of the mitochondrial permeability transition pore (MPTP) via cyclophilin D and p53 as mechanisms of EPHOSS. The MPTP inhibitor cyclosporin A protects mouse bone marrow and human cord blood HSCs from EPHOSS during collection in air, resulting in increased recovery of transplantable HSCs. Mitigating EPHOSS during cell collection and processing by pharmacological means may be clinically advantageous for transplantation.