To survive, respiring organisms must sense and respond to changes in environmental oxygen levels. Complex III of the mitochondrial electron transport chain (ETC) has been implicated in the O2 sensing pathway in mammals through its ability to increase production of reactive oxygen species (ROS) during hypoxia. The present study tested whether Complex III in yeast also contributes to O2 sensing during hypoxia. Strains deficient in mitochondrial DNA (rho0), the Rieske iron-sulfur protein (DeltaRip1) in Complex III, or an enzyme responsible for coenzyme Q biosynthesis (DeltaCoq2) were studied to determine the importance of Complex III activity in the transcriptional response to hypoxia. Loss of Complex III function abrogated the hypoxia-induced increase in ROS in each strain. Northern analysis identified a set of genes that are activated by hypoxia in wild-type but not in rho0, DeltaRip1, or DeltaCoq2 strains. Yeast lacking the transcription factors Yap1p, Mga2p, and Msn2p were also deficient in hypoxic activation of gene transcription, suggesting the importance of redox regulation in hypoxic gene expression. The authors conclude that Complex III of the ETC is required for ROS production and for expression of a group of hypoxia-inducible genes in yeast. These findings indicate that the mitochondrial O2 sensing mechanism is highly conserved throughout evolution.