Midkine (MK) is expressed in a precise temporal-spatial pattern during lung morphogenesis; however, its role in pulmonary homeostasis is unknown. Increased MK staining and mRNA expression were observed in the lungs of hypoxia-susceptible CAST/eiJ mice during hypoxia. MK expression was induced by hypoxia in cell lines in vitro. Because the transcription factor hypoxiainducible factor-1alpha (HIF-1alpha) modulates cellular responses to hypoxia, we tested whether increased expression of MK in the lung was mediated by HIF-1alpha. HIF-1alpha enhanced the transcription of MK, acting on HIF-1alpha regulatory elements located in the MK gene promoter. Site-directed mutagenesis of the 3' HIF response element in the MK promoter blocked the stimulatory effects of HIF-1alpha. To directly assess the role of MK on lung morphogenesis, transgenic mice were generated in which MK was expressed in the respiratory epithelial cells of the developing lung. MK increased muscularization of small pulmonary arteries, increasing alpha-smooth muscle actin and caldesmon staining and the expression of myocardin. MK directly enhanced the expression of myocardin and the smooth muscle-specific genes alpha-smooth muscle actin, calponin, and SM-22 in vascular smooth muscle precursor cells. Expression of MK in the respiratory epithelium is regulated by hypoxia and HIF-1alpha. These data provide a model wherein the respiratory epithelium responds to hypoxia via HIF-1alpha-dependent regulation of MK, enhancing myocardin expression to influence pulmonary vascular gene expression.