The abundance of the transcription factor hypoxia-inducible factor is regulated through hydroxylation of its alpha-subunits by a family of prolyl-hydroxylases (PHD1-3). Enzymatic activity of these PHDs is O2-dependent, which enables PHDs to act as cellular O2 sensor enzymes. Herein we studied endogenous PHD activity that was induced in cells grown under hypoxia or in the presence of nitric oxide. Under such conditions nuclear extracts contained much higher PHD activity than the respective cytoplasmic extracts. Although PHD1-3 were abundant in both compartments, knockdown experiments for each isoenzyme revealed that nuclear PHD activity was only due to PHD2. Maximal PHD2 activity was found between 120 and 210 microm O2. PHD2 activity was strongly decreased below 100 microm O2 with a half-maximum activity at 53 +/- 13 microm O2 for the cytosolic and 54 +/- 10 microm O2 for nuclear PHD2 matching the physiological O2 concentration within most cells. Our data suggest a role for PHD2 as a decisive oxygen sensor of the hypoxia-inducible factor degradation pathway within the cell nucleus.