Anemia is a common complication and contributes to increased morbidity and mortality in chronic kidney disease (CKD) patients. Whereas there has been a significant improvement of understanding the underlying mechanism of erythropoiesis, the treatment of renal anemia is still restricted to erythropoietin (EPO)-stimulating agents. The purpose of this article is to review the physiology of erythropoiesis, functional role of EPO and underlying molecular and cellular basis that regulate EPO production. Regulation of EPO production is at mRNA level. When anemia or hypoxia occurs, transcriptional factor, hypoxia-inducible factor (HIF), binds to EPO 5′ hypoxic response element and EPO gene transcription increases. The renal EPO is mainly produced by pericytes. In CKD, pericytes transdifferentiate to myofibroblasts, and subsequently the ability of EPO production decreases, leading to renal anemia. Recent experimental and clinical studies show the promising efficacy of prolyl hydroxylase inhibitors in renal anemia through increasing EPO production by stabilizing HIF. Recent advances on epigenetics create a new field to study EPO gene expression at chromatin level. We will discuss the role of demethylating agent on restoring EPO expression, providing a novel approach to the treatment of renal anemia.