Hypoxia-inducible factor 1 (HIF-1) binds to cis-acting hypoxia-response elements within the erythropoietin, vascular endothelial growth factor, and other genes to activate transcription in hypoxic cells. HIF-1 is a basic helix-loop-helix transcription factor composed of HIF-1alpha and HIF-1beta subunits. Here, we demonstrate that HIF-1alpha contains two transactivation domains located between amino acids 531 and 826. When expressed as GAL4 fusion proteins, the transcriptional activity of these domains increased in response to hypoxia. Fusion protein levels were unaffected by changes in cellular O2 tension. Two minimal transactivation domains were localized to amino acid residues 531-575 and 786-826. The transcriptional activation domains were separated by amino acid sequences that inhibited transactivation. Deletion analysis demonstrated that the gradual removal of inhibitory domain sequences (amino acids 576-785) was associated with progressively increased transcriptional activity of the fusion proteins, especially in cells cultured at 20% O2. Transcriptional activity of GAL4/HIF-1alpha fusion proteins was increased in cells exposed to 1% O2, cobalt chloride, or desferrioxamine, each of which also increased levels of endogenous HIF-1alpha protein but did not affect fusion protein levels. These results indicate that increased transcriptional activity mediated by HIF-1 in hypoxic cells results from both increased HIF-1alpha protein levels and increased activity of HIF-1alpha transactivation domains.