The mechanisms controlling the expression of the gene encoding for the hormone erythropoietin (EPO) are exemplary for oxygen-regulated gene expression. In humans and other mammals, hypoxia modulates EPO levels by increasing expression of the EPO gene. An association between polycythaemia and people living at high altitudes was first reported more than 100 years ago. Since the identification of EPO as the humoral regulator of red blood cell production and the cloning of the EPO gene, considerable progress has been made in understanding the regulation of EPO gene expression. This has finally led to the identification of a widespread cellular oxygen-sensing mechanism. Central to this mechanism is the transcription factor complex hypoxia-inducible factor (HIF)-1. The abundance and activity of HIF-1, a heterodimer of an alpha- and beta-subunit, is predominantly regulated by oxygen-dependent post-translational hydroxylation of the alpha-subunit. Non-heme ferrous iron containing hydroxylases use dioxygen and 2-oxoglutarate to specifically target proline and an asparagine residue in HIF-1alpha. As such, the three prolyl hydroxylases (prolyl hydroxylase domain-containing protein (PHD) 1, PHD2 and PHD3) and the asparagyl hydroxylase (factor inhibiting HIF (FIH)-1) act as cellular oxygen sensors. In addition to erythropoiesis, HIF-1 regulates a broad range of physiologically relevant genes involved in angiogenesis, apoptosis, vasomotor control and energy metabolism. Therefore, the HIF system is implicated in the pathophysiology of many human diseases. In addition to the tight regulation by oxygen tension, temporal and tissue-specific signals limit expression of the EPO gene primarily to the fetal liver and the adult kidney.