We have previously reported a model for melanoma progression in which oscillation between melanoma cell phenotypes characterized by invasion or proliferation is fundamental to tumor heterogeneity and disease progression. In this study we examine the possible role of hypoxia as one of the microenvironmental influences driving metastatic progression by promoting a switch from a proliferative to an invasive phenotype. Immunohistochemistry on primary human cutaneous melanoma biopsies showed intratumoral heterogeneity for cells expressing melanocytic markers, and a loss of these markers correlated with hypoxic regions. Furthermore, we show that the downregulation of melanocytic markers is dependent on hypoxia inducible factor 1α (HIF1α), a known regulator of the hypoxic response. In vitro invasion assays showed that a hypoxic environment increases the invasiveness of proliferative melanoma cell cultures in a HIF1α-dependent manner. In contrast, invasive phenotype melanoma cells showed no increase in invasive potential upon exposure to hypoxia. Thus, exposure of proliferative melanoma cells to hypoxic microenvironments is sufficient, in a HIF1α-dependent manner, to downregulate melanocytic marker expression and increase their invasive potential.