Ischaemia of the heart, brain and limbs is a leading cause of morbidity and mortality worldwide. Hypoxia stimulates the secretion of vascular endothelial growth factor (VEGF) and other angiogenic factors, leading to neovascularization and protection against ischaemic injury. Here we show that the transcriptional coactivator PGC-1α (peroxisome-proliferator-activated receptor-γ coactivator-1α), a potent metabolic sensor and regulator, is induced by a lack of nutrients and oxygen, and PGC-1α powerfully regulates VEGF expression and angiogenesis in cultured muscle cells and skeletal muscle in vivo. PGC-1α^-/- mice show a striking failure to reconstitute blood flow in a normal manner to the limb after an ischaemic insult, whereas transgenic expression of PGC-1α in skeletal muscle is protective. Surprisingly, the induction of VEGF by PGC-1α does not involve the canonical hypoxia response pathway and hypoxia inducible factor (HIF). Instead, PGC-1α coactivates the orphan nuclear receptor ERR-α (oestrogen-related receptor-α) on conserved binding sites found in the promoter and in a cluster within the first intron of the VEGF gene. Thus, PGC-1α and ERR-α, major regulators of mitochondrial function in response to exercise and other stimuli, also control a novel angiogenic pathway that delivers needed oxygen and substrates. PGC-1α may provide a novel therapeutic target for treating ischaemic diseases.