During early stages of limb development, the vasculature is subjected to extensive remodeling that leaves the prechondrogenic condensation avascular and, as we demonstrate hereafter, hypoxic. Numerous studies on a variety of cell types have reported that hypoxia has an inhibitory effect on cell differentiation. In order to investigate the mechanism that supports chondrocyte differentiation under hypoxic conditions, we inactivated the transcription factor hypoxia-inducible factor 1α (HIF1α) in mouse limb bud mesenchyme. Developmental analysis of Hif1α-depleted limbs revealed abnormal cartilage and joint formation in the autopod,suggesting that HIF1α is part of a mechanism that regulates the differentiation of hypoxic prechondrogenic cells. Dramatically reduced cartilage formation in Hif1α-depleted micromass culture cells under hypoxia provided further support for the regulatory role of HIF1αin chondrogenesis. Reduced expression of Sox9, a key regulator of chondrocyte differentiation, followed by reduction of Sox6, collagen type II and aggrecan in Hif1α-depleted limbs raised the possibility that HIF1α regulation of Sox9 is necessary under hypoxic conditions for differentiation of prechondrogenic cells to chondrocytes. To study this possibility, we targeted Hif1αexpression in micromass cultures. Under hypoxic conditions, Sox9expression was increased twofold relative to its expression in normoxic condition; this increment was lost in the Hif1α-depleted cells. Chromatin immunoprecipitation demonstrated direct binding of HIF1α to the Sox9 promoter, thus supporting direct regulation of HIF1αon Sox9 expression. This work establishes for the first time HIF1α as a key component in the genetic program that regulates chondrogenesis by regulating Sox9 expression in hypoxic prechondrogenic cells.