Decreased BRCA1 expression in the absence of genetic mutation is observed frequently in sporadic cancers of the breast and other sites, although little is known regarding the mechanisms by which the expression of this gene can be repressed. Here, we show that activating and repressive E2Fs simultaneously bind the BRCA1 promoter at two adjacent E2F sites in vivo, and that hypoxia induces a dynamic redistribution of promoter occupancy by these factors resulting in the transcriptional repression of BRCA1 expression. Functionally, we show that hypoxia is associated with impaired homologous recombination, whereas the nonhomologous end-joining (NHEJ) repair pathway is unaffected under these conditions. Repression of BRCA1 expression by hypoxia represents an intriguing mechanism of functional BRCA1 inactivation in the absence of genetic mutation. We propose that hypoxia-induced decreases in BRCA1 expression and consequent suppression of homologous recombination may lead to genetic instability by shifting the balance between the high-fidelity homologous recombination pathway and the error-prone NHEJ pathway of DNA repair. Furthermore, these findings provide a novel link between E2Fs and the transcriptional response to hypoxia and provide insight into the mechanisms by which the tumor microenvironment can contribute to genetic instability in cancer.