Hypoxia and the Net ternary complex factor (TCF) regulate similar processes (angiogenesis, wound healing, and cellular migration) and genes (PAI-1, c-fos, erg-1, NOS-2, HO-1, and vascular endothelial growth factor genes), suggesting that they are involved in related pathways. We show here that hypoxia regulates Net differently from the other TCFs and that Net plays a role in the hypoxic response in vivo in mice and in cells. Hypoxia induces Net depletion from target promoters, nuclear export, ubiquitylation, and proteasomal degradation. Key mediators of the hypoxic response, the prolyl-4-hydroxylases containing domain proteins (PHDs), regulate Net. PHD downregulation in normoxia leads to Net degradation, and PHD overexpression delays Net downregulation by hypoxia. Net inhibition by RNA interference or mutation leads to altered regulation by hypoxia of the Net targets PAI-1, c-fos, and egr-1. We propose that hypoxia stimulates transcription of target promoters through removal of the repressor function of Net. Interestingly, the hematocrit response to a chemical inducer of hypoxia-like responses (cobalt chloride) is strongly altered in Net mutant mice. Our results show that the Net TCF is part of the biological response to hypoxia, adding a new component to an important pathological and physiological process.