Investigation into the regulation of the erythropoietin gene by oxygen led to the discovery of a process of direct oxygen sensing that transduces many cellular and systemic responses to hypoxia. The oxygen-sensitive signal is generated through the catalytic action of a series of 2-oxoglutarate-dependent oxygenases that regulate the transcription factor hypoxia-inducible factor (HIF) by the post-translational hydroxylation of specific amino acid residues. Here we review the implications of the unforeseen complexity of the HIF transcriptional cascade for the physiology and pathophysiology of hypoxia, and consider the origins of post-translational hydroxylation as a signaling process.