During ascent to high altitude and pulmonary edema, the alveolar epithelial cells (AEC) are exposed to hypoxic conditions. Hypoxia inhibits alveolar fluid reabsorption and decreases Na,K-ATPase activity in AEC. We report here that exposure of AEC to hypoxia induced a time-dependent decrease of Na,K-ATPase activity and a parallel decrease in the number of Na,K-ATPase alpha(1) subunits at the basolateral membrane (BLM), without changing its total cell protein abundance. These effects were reversible upon reoxygenation and specific, because the plasma membrane protein GLUT1 did not decrease in response to hypoxia. Hypoxia caused an increase in mitochondrial reactive oxygen species (ROS) levels that was inhibited by antioxidants. Antioxidants prevented the hypoxia-mediated decrease in Na,K-ATPase activity and protein abundance at the BLM. Hypoxia-treated AEC deficient in mitochondrial DNA (rho(0) cells) did not have increased levels of ROS, nor was the Na,K-ATPase activity inhibited. Na,K-ATPase alpha(1) subunit was phosphorylated by PKC in hypoxia-treated AEC. In AEC treated with a PKC-zeta antagonist peptide or with the Na,K-ATPase alpha(1) subunit lacking the PKC phosphorylation site (Ser-18), hypoxia failed to decrease Na,K-ATPase abundance and function. Accordingly, we provide evidence that hypoxia decreases Na,K-ATPase activity in AEC by triggering its endocytosis through mitochondrial ROS and PKC-zeta-mediated phosphorylation of the Na,K-ATPase alpha(1) subunit.