Hypoxia induces angiogenesis and glycolysis for cell growth and survival, and also leads to growth arrest and apoptosis. HIF‐1α, a basic helix–loop–helix PAS transcription factor, acts as a master regulator of oxygen homeostasis by upregulating various genes under low oxygen tension. Although genetic studies have indicated the requirement of HIF‐1α for hypoxia‐induced growth arrest and activation of p21^cip1, a key cyclin‐dependent kinase inhibitor controlling cell cycle checkpoint, the mechanism underlying p21^cip1 activation has been elusive. Here we demonstrate that HIF‐1α, even in the absence of hypoxic signal, induces cell cycle arrest by functionally counteracting Myc, thereby derepressing p21^cip1. The HIF‐1α antagonism is mediated by displacing Myc binding from p21^cip1 promoter. Neither HIF‐1α transcriptional activity nor its DNA binding is essential for cell cycle arrest, indicating a divergent role for HIF‐1α. In keeping with its antagonism of Myc, HIF‐1α also downregulates Myc‐activated genes such as hTERT and BRCA1. Hence, we propose that Myc is an integral part of a novel HIF‐1α pathway, which regulates a distinct group of Myc target genes in response to hypoxia.