Hypoxia-inducible factor-1 (HIF-1) regulates the transcription of genes whose products play critical roles in energy metabolism, erythropoiesis, angiogenesis, and cell survival. Limited information is available concerning its function in mammalian hematopoiesis. Previous studies have demonstrated that homozygosity for a targeted null mutation in the Hif1alpha gene, which encodes the hypoxia-responsive alpha subunit of HIF-1, causes cardiac, vascular, and neural malformations resulting in lethality by embryonic day 10.5 (E10.5). This study revealed reduced myeloid multilineage and committed erythroid progenitors in HIF-1alpha-deficient embryos, as well as decreased hemoglobin content in erythroid colonies from HIF-1alpha-deficient yolk sacs at E9.5. Dysregulation of erythropoietin (Epo) signaling was evident from a significant decrease in mRNA levels of Epo receptor (EpoR) in Hif1alpha-/- yolk sac as well as Epo and EpoR mRNA in Hif1alpha-/- embryos. The erythropoietic defects in HIF-1alpha-deficient erythroid colonies could not be corrected by cytokines, such as vascular endothelial growth factor and Epo, but were ameliorated by Fe-SIH, a compound delivering iron into cells independently of iron transport proteins. Consistent with profound defects in iron homeostasis, Hif1alpha-/- yolk sac and/or embryos demonstrated aberrant mRNA levels of hepcidin, Fpn1, Irp1, and frascati. We conclude that dysregulated expression of genes encoding Epo, EpoR, and iron regulatory proteins contributes to defective erythropoiesis in Hif1alpha-/- yolk sacs. These results identify a novel role for HIF-1 in the regulation of iron homeostasis and reveal unexpected regulatory differences in Epo/EpoR signaling in yolk sac and embryonic erythropoiesis.