Alveolar epithelial cells are directly exposed to acute and chronic fluctuations in alveolar oxygen tension. Previously, we found that the oxygen-binding protein hemoglobin is expressed in alveolar Type II cells (ATII). Here, we report that ATII cells also express a number of highly specific transcription factors and other genes normally associated with hemoglobin biosynthesis in erythroid precursors. Because hypoxia-inducible factors (HIFs) were shown to play a role in hypoxia-induced changes in ATII homeostasis, we hypothesized that the hypoxia-induced increase in intracellular HIF exerts a concomitant effect on ATII hemoglobin expression. Treatment of cells from the ATII-like immortalized mouse lung epithelial cell line-15 (MLE-15) with hypoxia for 20 hours resulted in dramatic increases in cellular levels of HIF-2α protein and parallel significant increases in hemoglobin messenger RNA (mRNA) and protein expression, as compared with that of control cells cultured in normoxia. Significant increases in the mRNA of globin-associated transcription factors were also observed, and RNA interference (RNAi) experiments demonstrated that the expression of hemoglobin is at least partially dependent on the cellular levels of globin-associated transcription factor isoform 1 (GATA-1). Conversely, levels of prosurfactant proteins B and C significantly decreased in the same cells after exposure to hypoxia. The treatment of MLE-15 cells cultured in normoxia with prolyl 4-hydroxylase inhibitors, which mimic the effects of hypoxia, resulted in increases of hemoglobin and decreases of surfactant proteins. Taken together, these results suggest a relationship between hypoxia, HIFs, and the expression of hemoglobin, and imply that hemoglobin may be involved in the oxygen-sensing pathway in alveolar epithelial cells.