The abundance of the transcription factor hypoxia-inducible factor is regulated through hydroxylation of its ␣-subunits by a family of prolyl-hydroxylases (PHD1-3). Enzymatic activity of these PHDs is O 2 -dependent, which enables PHDs to act as cellular O 2 sensor enzymes. Herein we studied endogenous PHD activity that was induced in cells grown under hypoxia or in the presence of nitric oxide. Under such conditions nuclear extracts contained much higher PHD activity than the respective cytoplasmic extracts. Although PHD1-3 were abundant in both compartments, knockdown experiments for each isoenzyme revealed that nuclear PHD activity was only due to PHD2. Maximal PHD2 activity was found between 120 and 210 M O 2 . PHD2 activity was strongly decreased below 100 M O 2 with a half-maximum activity at 53 ؎ 13 M O 2 for the cytosolic and 54 ؎ 10 M O 2 for nuclear PHD2 matching the physiological O 2 concentration within most cells. Our data suggest a role for PHD2 as a decisive oxygen sensor of the hypoxia-inducible factor degradation pathway within the cell nucleus.The capability of mammalian cells to sense oxygen and adapt gene expression according to O 2 availability is critical for the maintenance of oxygen homoeostasis within the tissue. The heterodimeric transcriptional regulator hypoxia-inducible factor (HIF) 2 is central to the regulation of gene expression in response to decreased oxygen levels, i.e. hypoxia (1). HIFs are composed of the constitutive -subunit and one of three O 2 -labile ␣-subunits HIF-1, -2, or -3␣ (2, 3). Both the stability and the activity of the HIF ␣-subunits are regulated by oxygen-dependent post-translational modifications.Under normoxic conditions HIF␣s are hydroxylated by a family of prolyl-4-hydroxylases (PHD1-3) at two conserved proline residues in HIF-1␣ and -2␣ (Pro 402/564 or Pro 405/531 , respectively) or a single proline residue in HIF-3␣ (Pro 490 ) (4 -6). Hydroxylated HIF␣ is recognized by the von HippelLindau protein (pVHL) E3 ubiquitin ligase complex and targeted for proteasomal degradation (7-9). Hypoxia reduces prolyl-hydroxylation by PHDs, resulting in stabilization of the ␣-subunit. This allows dimerization with the -subunit and induces expression of about 100 genes involved in adaptation to hypoxia (10). Transcriptional activity of the HIF complex is regulated by hydroxylation of an asparagine residue within the C-terminal trans-activating domain of HIF-1␣ and -2␣ by an asparagyl-hydroxylase termed factor-inhibiting HIF; active factor-inhibiting HIF hydroxylates Asp 803 in HIF-1␣ under normoxia, which impedes binding of the transcriptional coactivatorp300/CBP(11,12).ByhydroxylatingHIF-␣sinanoxygen-dependent manner, PHDs and factor-inhibiting HIF function as oxygen-sensing enzymes of HIF activation.The three PHD isoenzymes belong to the superfamily of iron and 2-oxoglutarate-dependent dioxygenases. These enzymes need O 2 as cosubstrate, which provides the molecular basis for their O 2 -sensing function. Oxygen dependence of PHDs is reflected by their K m (O 2 ) va...