ER stress in type II alveolar epithelial cells (AECs) is common in idiopathic pulmonary fibrosis (IPF), but the contribution of ER stress to lung fibrosis is poorly understood. We found that mice deficient in C/EBP homologous protein (CHOP), an ER stress–regulated transcription factor, were protected from lung fibrosis and AEC apoptosis in 3 separate models where substantial ER stress was identified. In mice treated with repetitive intratracheal bleomycin, we identified localized hypoxia in type II AECs as a potential mechanism explaining ER stress. To test the role of hypoxia in lung fibrosis, we treated mice with bleomycin, followed by exposure to 14% O 2, which exacerbated ER stress and lung fibrosis. Under these experimental conditions, CHOP–/–mice, but not mice with epithelial HIF (HIF1/HIF2) deletion, were protected from AEC apoptosis and fibrosis. In vitro studies revealed that CHOP regulates hypoxia-induced apoptosis in AECs via the inositol-requiring enzyme 1α (IRE1α) and the PKR-like ER kinase (PERK) pathways. In human IPF lungs, CHOP and hypoxia markers were both upregulated in type II AECs, supporting a conclusion that localized hypoxia results in ER stress–induced CHOP expression, thereby augmenting type II AEC apoptosis and potentiating lung fibrosis.