Preclinical studies of primary cancer cells are always done after tumors are removed from patients or animals at ambient atmospheric oxygen (O2, ~21%). However, O2 concentrations in organs are in the ~3-10% range, with most tumors in an hypoxic or 1-2% O2 environment in vivo. Although effects of O2 tension on tumor cell characteristics in vitro have been studied, these studies are done only after tumors are first collected and processed in ambient air. Similarly, sensitivity of primary cancer cells to anti-cancer agents is routinely examined at ambient O2. Here, using both mouse models and human cancers, we demonstrate that tumors collected, processed and propagated at physiologic (physioxia) O2 compared to ambient air display very distinct differences in key signaling networks including Lgr5/Wnt, Yap, and Nrf2/Keap1, nuclear reactive oxygen species levels, alternative splicing, and sensitivity to several targeted therapies including PIK3CAalpha-specific and EGFR inhibitors. Significance: Extra-physiologic oxygen shock/stress (EPHOSS), as noted in cells collected/processed under ambient air, has been demonstrated to have significant impact on numbers and engrafting ability of hematopoietic stem cells. We report deleterious effects of EPHOSS on cancer cell behavior and EPHOSS-mediated effects on cancer cells give misleading information on signaling pathway activation that could severely impact the relevance of these findings. Cancer cells under EPHOSS show higher proliferation rate compared to cells under physioxia and thus are sensitive to anti-proliferative agents. Thus, drugs that show effectiveness on cancer cells collected in ambient air and subjected to EPHOSS may not be effective or as relevant in vivo, results that could partially explain the limited clinical translation of laboratory findings. Evaluating cell signaling and effects of drugs on cancer cells under physiologic O2 prior to in vivo studies could substantially reduce cost and aid in drug discovery relevant to the actual physioxia/pathological status of the tumor cells in vivo.