The hypoxia-inducible factors 1alpha (HIF-1alpha) and 2alpha (HIF-2alpha) have extensive structural homology and have been identified as key transcription factors responsible for gene expression in response to hypoxia. They play critical roles not only in normal development, but also in tumor progression. Here we report on the differential regulation of protein expression and transcriptional activity of HIF-1alpha and -2alpha by hypoxia in immortalized mouse embryo fibroblasts (MEFs). We show that oxygen-dependent protein degradation is restricted to HIF-1alpha, as HIF-2alpha protein is detected in MEFs regardless of oxygenation and is localized primarily to the cytoplasm. Endogenous HIF-2alpha remained transcriptionally inactive under hypoxic conditions; however, ectopically overexpressed HIF-2alpha translocated into the nucleus and could stimulate expression of hypoxia-inducible genes. We show that the factor inhibiting HIF-1 can selectively inhibit the transcriptional activity of HIF-1alpha but has no effect on HIF-2alpha-mediated transcription in MEFs. We propose that HIF-2alpha is not a redundant transcription factor of HIF-1alpha for hypoxia-induced gene expression and show evidence that there is a cell type-specific modulator(s) that enables selective activation of HIF-1alpha but not HIF-2alpha in response to low-oxygen stress.