The expression of hypoxia-inducible factor-1 (HIF-1) correlates with poor clinical outcomes and confers resistance to the apoptosis of the tumor cells that are exposed to hypoxia. Presently, the mechanism underlying this phenomenon is poorly understood. In this study we provide evidence that transglutaminase 2 (TG2), an enzyme that catalyses protein crosslinking reactions, is a transcriptional target of HIF-1 to enhance the survival of hypoxic cells. We found that hypoxia induces TG2 expression through an HIF-1 dependent pathway and concurrently activates intracellular TG2. The hypoxic cells overexpressing TG2 showed resistance to apoptosis. Conversely, the hypoxic cells treated with either TG2 inhibitor or small interfering RNA (siRNA) became sensitive to apoptosis. Activation of TG2 in response to hypoxic stress inhibited caspase-3 activity by forming crosslinked multimer, resulting in insoluble aggregates. TG2 also activates nuclear factor (NF)-kappaB pathway after hypoxic stress, and thereby induces the expression of cellular inhibitor of apoptosis 2. The anti-apoptotic role of TG2 was further confirmed in vivo using xenografts in athymic mice. Our results indicate that TG2 is an anti-apoptotic mediator of HIF-1 through modulating both apoptosis and survival pathways and may confer a selective growth advantage to tumor cells. These findings suggest that the inhibition of TG2 may offer a novel strategy for anticancer therapy.