A classic physiologic response to systemic hypoxia is the increase in red blood cell production. Hypoxia-inducible factors (HIFs) orchestrate this response by inducing cell-type specific gene expression changes that result in increased erythropoietin (EPO) production in kidney and liver, in enhanced iron uptake and utilization and in adjustments of the bone marrow microenvironment that facilitate erythroid progenitor maturation and proliferation. In particular HIF-2 has emerged as the transcription factor that regulates EPO synthesis in the kidney and liver and plays a critical role in the regulation of intestinal iron uptake. Its key function in the hypoxic regulation of erythropoiesis is underscored by genetic studies in human populations that live at high-altitude and by mutational analysis of patients with familial erythrocytosis. This review provides a perspective on recent insights into HIF-controlled erythropoiesis and iron metabolism, and examines cell types that have EPO-producing capability. Furthermore, the review summarizes clinical syndromes associated with mutations in the O2-sensing pathway and the genetic changes that occur in high altitude natives. The therapeutic potential of pharmacologic HIF activation for the treatment of anemia is discussed.