This study was undertaken to test the hypothesis that endurance training in hypoxia is superior to training of the same intensity in normoxia. To avoid adaptation to hypoxia, the subjects lived under normoxic conditions when not training. A secondary objective of this study was to compare the effect of high- vs. moderate-intensity training on aerobic performance variables. Thirty-three men without prior endurance training underwent a cycle ergometer training of 6 weeks, 5 d/week, 30 minutes/d. The subjects were assigned to 4 groups, N-high, N-low, H-high and H-low based on the training criteria normoxia (N; corresponding to a training altitude of 600 m), vs. hypoxia (H; training altitude 3850 m) and intensity (high; corresponding to 80% and low: corresponding to 67% of VO2max). VO2max measured in normoxia increased between 8.5 to 11.1%, independent of training altitude or intensity. VO2max measured in hypoxia increased between 2.9 and 7.2%. Hypoxia training resulted in significantly larger increases than normoxia training. Maximal power that subjects could maintain over a thirty-minute period (measured in normoxia or hypoxia) increased from 12.3 - 26.8% independent of training altitude. However, subjects training at high intensity increased performance more than subjects training at a low intensity. Muscle volume of the knee-extensors as measured by magnetic resonance imaging increased significantly in the H-high group only (+ 5.0%). Mitochondrial volume density measured by EM-morphometry in biopsy samples of m. vastus lat. increased significantly in all groups with the highest increase seen in the H-high group (+ 59%). Capillary length density increased significantly in the H-high group only (+ 17.2%). The main finding of this study is that in previously untrained people, training in hypoxia while living at low altitude increases performance in normoxia to the same extent as training in normoxia, but leads to larger increases of aerobic performance variables when measured under hypoxic conditions. Training intensity had no effect on the gain of VO2max. On the level of skeletal muscle tissue, the combination of hypoxia with high training intensity constitutes the most effective stimulus for increasing muscle oxidative capacity.