Chronic hypoxia induces sequential abnormalities in oxygen metabolism (for example, oxidative stress, nitrosative stress, advanced glycation, carbonyl stress, endoplasmic reticulum stress) in the kidneys of individuals with diabetes. Identification of these abnormalities improves our understanding of therapeutic benefits that can be achieved with antihypertensive agents, the control of hyperglycemia and/or hyperinsulinemia and the dietary correction of obesity. Key to the body's defense against hypoxia is hypoxia-inducible factor, the activity of which is modulated by prolyl hydroxylases (PHDs)-oxygen sensors whose inhibition may prove therapeutic. Renal benefits of small-molecule PHD inhibitors have been documented in several animal models, including those of diabetic nephropathy. Three different PHD isoforms have been identified (PHD1, PHD2 and PHD3) and their respective roles have been delineated in knockout mouse studies. Unfortunately, none of the current inhibitors is specific for a distinct PHD isoform. Nonspecific inhibition of PHDs might induce adverse effects, such as those associated with PHD2 inhibition. Specific disruption of PHD1 induces hypoxic tolerance, without angiogenesis and erythrocytosis, through the reprogramming of basal oxygen metabolism and decreased generation of oxidative stress in hypoxic mitochondria. A specific PHD1 inhibitor might, therefore, offer a novel therapy for abnormal oxygen metabolism not only in the diabetic kidney, but also in other diseases for which hypoxia is a final, common pathway.