Hypoxia plays an important role in development, cellular homeostasis, and pathological conditions, such as cancer and stroke. There is also growing evidence that hypoxia is an important modulator of the inflammatory process. Hypoxia-inducible factors (HIFs) are a family of proteins that regulate the cellular response to oxygen deficit, and loss of HIFs impairs inflammatory cell function. There is little known, however, about the role of epithelial-derived HIF signaling in modulating inflammation. Cobalt is capable of eliciting an allergic response and promoting HIF signaling. To characterize the inflammatory function of epithelial-derived HIF in response to inhaled cobalt, a conditional lung-specific HIF1alpha, the most ubiquitously expressed HIF, deletion mouse, was created. Control mice showed classic signs of metal-induced injury following cobalt exposure, including fibrosis and neutrophil infiltration. In contrast, HIF1alpha-deficient mice displayed a Th2 response that resembled asthma, including increased eosinophilic infiltration, mucus cell metaplasia, and chitinase-like protein expression. The results suggest that epithelial-derived HIF signaling has a critical role in establishing a tissue's inflammatory response, and compromised HIF1alpha signaling biases the tissue towards a Th2-mediated reaction.