Regulation of the growth and metabolism of large organisms is tightly constrained by the need for precise oxygen homeostasis. Work on control of the haematopoietic growth factor erythropoietin has led to the recognition of a widespread transcriptional response to hypoxia which provides insights into how this is achieved. The central mediator of this response is a DNA binding complex termed hypoxia inducible factor 1 (HIF‐1), which plays a key role in the regulation by oxygen of a large and rapidly growing panel of genes. In cancer, activity of the HIF system is up‐regulated both by microenvironmental hypoxia and by genetic changes. The clearest example of genetic activation is seen in the hereditary cancer syndrome von Hippel–Lindau (VHL) disease. In normal cells the product of the VHL tumour suppressor gene targets the regulatory HIF subunits (HIF‐1α and HIF‐2α) for oxygen‐dependent proteolysis, acting as the substrate recognition component of an E3 ubiquitin ligase. In pVHL defective cells this process is blocked leading to constitutive up‐regulation of HIF‐1α subunits, activation of the HIF complex and overexpression of HIF target genes. Using gene array screens we have defined a large number of VHL‐regulated genes. The majority of these show hypoxia‐inducible responses, supporting the central involvement of pVHL in gene regulation by oxygen. In addition to known HIF target genes involved in angiogenesis, glucose metabolism and vasomotor control, these new targets include examples with functions in matrix metabolism, apoptosis, carbon dioxide metabolism and secondary cascades of transcriptional control. Thus activation of HIF provides insights into the classical metabolic alterations in cancer cells, and into the mechanisms by which microenvironmental hypoxia might influence tumour behaviour. In the case of VHL disease, this activation can be linked to mutations in a defined tumour suppressor gene. Equally regulation of the HIF‐1α/pVHL interaction in normal cells should provide insights into the physiological mechanisms operating in cellular oxygen sensing.