The blood‐brain barrier (BBB) regulates molecular and cellular entry from the cerebrovasculature into the surrounding brain parenchyma. Many diseases of the brain are associated with dysfunction of the BBB, where hypoxia is a common stressor. However, the contribution of hypoxia to BBB dysfunction is challenging to study due to the complexity of the brain microenvironment. In this study, we used a BBB model with brain microvascular endothelial cells and pericytes differentiated from iPSCs to investigate the effect of hypoxia on barrier function. We found that hypoxia‐induced barrier dysfunction is dependent upon increased actomyosin contractility and is associated with increased fibronectin fibrillogenesis. We propose a role for actomyosin contractility in mediating hypoxia‐induced barrier dysfunction through modulation of junctional claudin‐5. Our findings suggest pericytes may protect brain microvascular endothelial cells from hypoxic stresses and that pericyte‐derived factors could be candidates for treatment of pathological barrier‐forming tissues.