Erythropoietin gene (EPO) expression is activated by tissue hypoxia in renal peritubular interstitial fibroblasts and, to a lesser extent, in hepatocytes and ito cells of the liver. A hypoxia-inducible enhancer spanning approximately 50 bp within the 3'-flanking region of the EPO gene is required for transcriptional activation in hypoxic cells. Hypoxia-inducible factor 1 is a basic helix-loop-helix protein that binds at the 5' end of the enhancer. The binding of hypoxia-inducible factor 1 is absolutely required for enhancer function. Hepatocyte nuclear factor 4 is an orphan receptor that binds at the 3' end of the enhancer. The binding of hepatocyte nuclear factor 4 augments hypoxia-inducible transcription mediated by the enhancer but is not absolutely required for enhancer function. Factors binding to the enhancer may interact synergistically with factors binding to the EPO promoter to activate transcription in hypoxic cells. Indirect evidence suggests that oxygen tension may be sensed by a hemoprotein. In one model, the putative hemoprotein adopts different conformational states depending on whether O2 is bound. Another model proposes that the hemoprotein converts O2 to H2O2. The protein tyrosine kinase c-Src, GTP-binding protein Ras, and MAP kinase signal pathways have been implicated in hypoxia signal transduction, but no direct evidence links these pathways to EPO transcriptional activation.