Hypoxia-inducible factors (HIFs), which consist of α and β subunits, are transcription factors involved in regulation of a variety of cellular functions. By blocking the function of the tumor suppressor p53, over-expressions of HIFs are linked to carcinogenesis and tumor progression. Inorganic arsenic, a ubiquitous environmental contaminant, is associated with an increased risk of cancer. Although there are several hypotheses regarding arsenic-induced carcinogenesis, the mechanism of action remains obscure. We have shown that long-term exposure of human bronchial epithelial (HBE) cells to a low level of arsenite increases their proliferation rate and anchorage-independent growth. When introduced into nude mice, the transformed cells are tumorigenic. The present report demonstrates that, with increased time of exposure to arsenite, there is more increased expression of HIF-2α, but not HIF-1α. These factors are known to have different functions, and, in some cases, opposite effects. Arsenite induces accumulation of HIF-2α by inhibiting its degradation through the ubiquitin-mediated proteasome pathway. HIF-2α knockdown, but not HIF-1α knockdown, increases the activation of p53. Finally, inhibition of HIF-2α blocks arsenite-induced proliferation and malignant transformation. Thus, our studies show that blockade of p53 function by inhibiting the ubiquitin-mediated proteasome degradation of HIF-2α, but not that of HIF-1α, is involved in arsenite-induced proliferation and neoplastic transformation of HBE cells.