The HIFs (hypoxia-inducible factors) are a family of heterodimeric transcription factors essential for the adaptation of cells to reduced oxygen supply. Three human PHDs (prolyl hydroxylase domain proteins, PHD1-PHD3) initiate oxygen-dependent degradation of HIF-alpha-subunits in normoxia. RNA interference directed against PHD2, but not PHD1 or PHD3, is sufficient to stabilize HIF-1alpha in normoxia. Therefore PHD2 is regarded as the main cellular oxygen sensor. PHD2 itself is up-regulated by hypoxia and may thus limit hypoxic signalling. By sequence analysis, we predicted a promoter approx. 3.5 kb 5' of the translation start codon and a second promoter located in a CpG island immediately upstream of the coding sequence. A consensus HIF-1-binding site that is conserved in the murine phd2 gene was detected in the CpG island. By electrophoretic mobility-shift assay, we demonstrated binding of HIF-1 to the putative HIF-1-binding site. In luciferase reporter vectors, the isolated upstream promoter was inactive in all cell lines tested unless 200 bp were deleted at the 3'-end. The downstream promoter was active and induced by hypoxia. In reporter vectors containing both promoter sequences, luciferase activity was equal to vectors containing only the downstream promoter. In cells transfected with a vector containing both promoters, a single luciferase transcript was detectable. This transcript had the same length as transcripts from a vector containing the downstream promoter only. We conclude that the phd2 gene is transcribed exclusively from the downstream promoter that contains a functional hypoxia-responsive, cis-regulatory element. Our results establish that PHD2 is a direct HIF target gene.