Pharmacologic activation of the heterodimeric HIF transcription factor appears promising as a strategy to treat diseases, such as anemia, myocardial infarction, and stroke, in which tissue hypoxia is a prominent feature. HIF accumulation is normally linked to oxygen availability because an oxygen-dependent posttranslational modification (prolyl hydroxylation) marks the HIFα subunit for polyubiquitination and destruction. Three enzymes (PHD1, PHD2, and PHD3) capable of catalyzing this reaction have been identified, although PHD2 (also called Egln1) appears to be the primary HIF prolyl hydroxylase in cell culture experiments. We found that conditional inactivation of PHD2 in mice is sufficient to activate a subset of HIF target genes, including erythropoietin, leading to striking increases in red blood cell production. Mice lacking PHD2 exhibit premature mortality associated with marked venous congestion and dilated cardiomyopathy. The latter is likely the result of hyperviscosity syndrome and volume overload, although a direct effect of chronic, high-level HIF stimulation on cardiac myocytes cannot be excluded