Sepsis-associated acute kidney injury (AKI) is a common and morbid condition that is distinguishable from typical ischemic renal injury by its paucity of tubular cell death. The mechanisms underlying renal dysfunction in individuals with sepsis-associated AKI are therefore less clear. Here we have shown that endotoxemia reduces oxygen delivery to the kidney, without changing tissue oxygen levels, suggesting reduced oxygen consumption by the kidney cells. Tubular mitochondria were swollen, and their function was impaired. Expression profiling showed that oxidative phosphorylation genes were selectively suppressed during sepsis-associated AKI and reactivated when global function was normalized. PPARγ coactivator-1α (PGC-1α), a major regulator of mitochondrial biogenesis and metabolism, not only followed this pattern but was proportionally suppressed with the degree of renal impairment. Furthermore, tubular cells had reduced PGC-1α expression and oxygen consumption in response to TNF-α; however, excess PGC-1α reversed the latter effect. Both global and tubule-specific PGC-1α-knockout mice had normal basal renal function but suffered persistent injury following endotoxemia. Our results demonstrate what we believe to be a novel mechanism for sepsis-associated AKI and suggest that PGC-1α induction may be necessary for recovery from this disorder, identifying a potential new target for future therapeutic studies.