Erythropoietin is distinct among the hematopoietic growth factors because it is produced primarily in the kidneys rather than the bone marrow. The kidney functions as a critmeter in that it senses oxygen tension and extracellular volume. By regulating red cell mass through erythropoietin and plasma volume through excretion of salt and water, the kidney sets the hematocrit at a normal value of 45%. This is not a random number, but a value that maximizes oxygen delivery to peripheral tissues. The ability of the kidney to coordinate these two volumes to generate a hematocrit of 45% establishes it as the logical site for erythropoietin production. The kidney has the unique ability to translate a measure of plasma volume as tissue oxygen pressure required to regulate erythropoietin production. I hypothesize that the critmeter is a functional unit that regulates the hematocrit. The critmeter is found at the tip of the juxtamedullary region of the cortical labyrinth in the kidney, where erythropoietin is made physiologically. Renal vasculature and nephron segment heterogeneity in sodium reabsorption generate the marginal tissue oxygen pressure required to trigger the production of erythropoietin. The balance of the oxygen consumption for sodium reabsorption and the oxygen delivery to the proximal tubule is reflected by the tissue oxygen pressure that determines red blood cell mass adjusted to plasma volume. Factors that affect blood supply and sodium reabsorption in a discordant manner may modulate the critmeter (eg, angiotensin II). Examples of clinical disorders caused by dysfunction or resetting of the critmeter are described.