To understand the molecular mechanisms underlying compound-induced hemangiosarcomas in mice, and therefore, their human relevance, a systems biology approach was undertaken using transcriptomics and Causal Network Modeling from mice treated with 2-butoxyethanol (2-BE). 2-BE is a hemolytic agent that induces hemangiosarcomas in mice. We hypothesized that the hemolysis induced by 2-BE would result in local tissue hypoxia, a well-documented trigger for endothelial cell proliferation leading to hemangiosarcoma. Gene expression data from bone marrow (BM), liver, and spleen of mice exposed to a single dose (4 h) or seven daily doses of 2-BE were used to develop a mechanistic model of hemangiosarcoma. The resulting mechanistic model confirms previous work proposing that 2-BE induces macrophage activation and inflammation in the liver. In addition, the model supports local tissue hypoxia in the liver and spleen, coupled with increased erythropoeitin signaling and erythropoiesis in the spleen and BM, and suppression of mechanisms that contribute to genomic stability, events that could be contributing factors to hemangiosarcoma formation. Finally, an immunohistochemistry method (Hypoxyprobe) demonstrated that tissue hypoxia was present in the spleen and BM. Together, the results of this study identify molecular mechanisms that initiate hemangiosarcoma, a key step in understanding safety concerns that can impact drug decision processes, and identified hypoxia as a possible contributing factor for 2-BE-induced hemangiosarcoma in mice.