Objective. To map hypoxic areas in arthritic synovium and to establish the relevance of low oxygen levels to the phenotype of synovial fibroblasts, with special focus on bone degradation.Methods. To analyze the distribution of hypoxia in arthritic joints, the hypoxia marker EF5 was administered to mice with collagen-induced arthritis (CIA). To evaluate the effect of hypoxia on rheumatoid arthritis synovial fibroblasts (RASFs), reverse suppression subtractive hybridization and complementary DNA array were used. Real-time polymerase chain reaction, Western blotting, and immunohistochemistry were used to evaluate the expression of inhibitor of DNA binding/ differentiation 2 (ID-2). To investigate the function of ID-2 in RASFs, cells were transfected either with ID-2 vector or with ID-2-specific small interfering RNA.Results. EF5 staining showed the presence of hypoxia in arthritic joints, particularly at sites of synovial invasion into bone. Differential expression analysis revealed that ID-2 was strongly induced by hypoxia in RASFs. Immunohistochemical analysis of CIA mouse synovium and human RA synovium showed a strong expression of ID-2 by RASFs at sites of synovial invasion into bone. Overexpression of ID-2 in RASFs significantly induced the expression of several factors promoting osteoclastogenesis. The biologic relevance of the potent osteoclastogenesis-promoting effects was shown by coculture assays of ID-2-overexpressing RASFs with bone marrow cells, leading to an increased differentiation of osteoclasts from bone marrow precursors.Conclusion. The data show that hypoxic conditions are present at sites of inflammation and synovial invasion into bone in arthritic synovium. Hypoxiainduced ID-2 may contribute to joint destruction in RA patients by promoting synovial fibroblast-dependent osteoclastogenesis.