Studies of regulation of the haematopoietic growth factor erythropoietin led to the unexpected discovery of a widespread system of direct oxygen sensing that regulates gene expression in animals. The oxygen-sensitive signal is generated by a series of non-haem Fe(II)- and 2-oxoglutarate-dependent dioxygenases that catalyse the post-translational hydroxylation of specific residues in the transcription factor hypoxia-inducible factor (HIF). These hydroxylations promote both oxygen-dependent degradation and oxygen-dependent inactivation of HIF, but are suppressed in hypoxia, leading to the accumulation of HIF and assembly of an active transcriptional complex in hypoxic cells. Hypoxia-inducible factor activates an extensive transcriptional cascade that interfaces with other cell signalling pathways, microRNA networks and RNA-protein translational control systems. The relationship of these cellular signalling pathways to the integrated physiology of oxygen homeostasis and the implication of dysregulating these massive physiological pathways in diseases such as cancer are discussed.