Abstract  Oxygen‐dependent prolyl hydroxylation of hypoxia‐inducible factor (HIF) by a set of closely related prolyl hydroxylase domain enzymes (PHD1, 2 and 3) regulates a range of transcriptional responses to hypoxia. This raises important questions about the role of these oxygen‐sensing enzymes in integrative physiology. We investigated the effect of both genetic deficiency and pharmacological inhibition on the change in ventilation in response to acute hypoxic stimulation in mice. Mice exposed to chronic hypoxia for 7 days manifest an exaggerated hypoxic ventilatory response (HVR) (10.8 ± 0.3 versus 4.1 ± 0.7 ml min⁻¹ g⁻¹ in controls; P < 0.01). HVR was similarly exaggerated in PHD2^+/− animals compared to littermate controls (8.4 ± 0.7 versus 5.0 ± 0.8 ml min⁻¹ g⁻¹; P < 0.01). Carotid body volume increased (0.0025 ± 0.00017 in PHD2^+/− animals versus 0.0015 ± 0.00019 mm³ in controls; P < 0.01). In contrast, HVR in PHD1^−/− and PHD3^−/− mice was similar to littermate controls. Acute exposure to a small molecule PHD inhibitor (PHI) (2‐(1‐chloro‐4‐hydroxyisoquinoline‐3‐carboxamido) acetic acid) did not mimic the ventilatory response to hypoxia. Further, 7 day administration of the PHI induced only modest increases in HVR and carotid body cell proliferation, despite marked stimulation of erythropoiesis. This was in contrast with chronic hypoxia, which elicited both exaggerated HVR and cellular proliferation. The findings demonstrate that PHD enzymes modulate ventilatory sensitivity to hypoxia and identify PHD2 as the most important enzyme in this response. They also reveal differences between genetic inactivation of PHDs, responses to hypoxia and responses to a pharmacological inhibitor, demonstrating the need for caution in predicting the effects of therapeutic modulation of the HIF hydroxylase system on different physiological responses.