The activity of hypoxia-inducible transcription factor HIF, an alphabeta heterodimer that has an essential role in adaptation to low oxygen availability, is regulated by two oxygen-dependent hydroxylation events. Hydroxylation of specific proline residues by HIF prolyl 4-hydroxylases targets the HIF-alpha subunit for proteasomal destruction, whereas hydroxylation of an asparagine in the C-terminal transactivation domain prevents its interaction with the transcriptional coactivator p300. The HIF asparaginyl hydroxylase is identical to a previously known factor inhibiting HIF (FIH). We report here that recombinant FIH has unique catalytic and inhibitory properties when compared with those of the HIF prolyl 4-hydroxylases. FIH was found to require particularly long peptide substrates so that omission of only a few residues from the N or C terminus of a 35-residue HIF-1alpha sequence markedly reduced its substrate activity. Hydroxylation of two HIF-2alpha peptides was far less efficient than that of the corresponding HIF-1alpha peptides. The K(m) of FIH for O(2) was about 40% of its atmospheric concentration, being about one-third of those of the HIF prolyl 4-hydroxylases but 2.5 times that of the type I collagen prolyl 4-hydroxylase. Several 2-oxoglutarate analogs were found to inhibit FIH but with distinctly different potencies from the HIF prolyl 4-hydroxylases. For example, the two most potent HIF prolyl 4-hydroxylase inhibitors among the compounds studied were the least effective ones for FIH. It should therefore be possible to develop specific small molecule inhibitors for the two enzyme classes involved in the hypoxia response.