The transcription factor complex Hypoxia inducible factor 1 (HIF-1) controls the expression of most genes involved in adaptation to hypoxic conditions. Oxygen-dependency is maintained by prolyl- and asparagyl-4-hydroxylases (PHDs/FIH-1) belonging to the superfamily of iron(II) and 2-oxoglutarate dependent dioxygenases. Hydroxylation of the HIF-1alpha subunit by PHDs and FIH-1 leads to its degradation and inactivation. By hydroxylating HIF-1alpha in an oxygen-dependent manner PHDs and FIH-1 function as oxygen-sensing enzymes of HIF signalling. Besides molecular oxygen nitric oxide (NO), a mediator of the inflammatory response, can regulate HIF-1alpha accumulation, HIF-1 activity and HIF-1 dependent target gene expression. Recent studies addressing regulation of HIF-1 by NO revealed a complex and paradoxical picture. Acute exposure of cells to high doses of NO increased HIF-1alpha levels irrespective of the residing oxygen concentration whereas prolonged exposure to NO or low doses of this radical reduced HIF-1alpha accumulation even under hypoxic conditions. Several mechanisms were found to contribute to this paradoxical role of NO in regulating HIF-1. More recent studies support the view that NO regulates HIF-1 by modulating the activity of the oxygen-sensor enzymes PHDs and FIH-1. NO dependent HIF-1alpha accumulation under normoxia was due to direct inhibition of PHDs and FIH-1 most likely by competitive binding of NO to the ferrous iron in the catalytically active center of the enzymes. In contrast, reduced HIF-1alpha accumulation by NO under hypoxia was mainly due to enhanced HIF-1alpha degradation by induction of PHD activity. Three major mechanisms are discussed to be involved in enhancing the PHD activity despite the lack of oxygen: (1) NO mediated induction of a HIF-1 dependent feedback loop leading to newly expressed PHD2 and enhanced nuclear localization, (2) O2-redistribution towards PHDs after inhibition of mitochondrial respiration by NO, (3) reactivation of PHD activity by a NO mediated increase of iron and 2-oxoglutarate and/or involvement of reactive oxygen and/or nitrogen species.