Although hypoxia-inducible factor-␣ (HIF␣) subunitspecific hydroxylation and proteolytic breakdown explain the binary switch between the presence (hypoxia) and absence (normoxia) of HIFs, little is known of the mechanisms that fine-tune HIF activity under constant, rather than changing, oxygen tensions. Here, we report that the Drosophila HIF␣ homolog, the basic helix-loophelix/PAS protein Sima (Similar), in hypoxic cultures of SL2 cells is expressed in full-length (fl) and splice variant (sv) isoforms. The following evidence supports the role of flSima as functional HIF␣ and the role of SL2 HIF as a transcriptional activator or suppressor. The pO 2 dependence of Sima abundance matched that of HIF activity. HIF-dependent changes in candidate target gene expression were detected through variously effective stimuli: hypoxia (strong) > iron chelation, e.g. desferrioxamine (moderate) > > transition metals, e.g. cobalt Ӎ normoxia (ineffective). Sima overexpression augmented hypoxic induction or suppression of different targets. In addition to the full-length exon 1-12 transcript yielding the 1510-amino acid HIF␣ homolog, the sima gene also expressed, specifically under hypoxia, an exon 1-7/12 splice variant, which translated into a 426-amino acid Sima truncation termed svSima. svSima contains basic helix-loop-helix and PAS sequences identical to those of flSima, but, because of deletion of exons 8 -11, lacks the oxygen-dependent degradation domain and nuclear localization signals. Overexpressed svSima failed to transactivate reporter genes. However, it attenuated HIF (Sima⅐Tango)-stimulated reporter expression in a dose-dependent manner. Thus, svSima has the potential to regulate Drosophila HIF function under steady and hypoxic pO 2 by creating a cytosolic sink for the Sima partner protein Tango.