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Hypoxia affects alveolar homeostasis and may induce epithelial injury, which has been implicated in lung diseases such as fibrosis. The underlying cellular and molecular mechanisms are, however, largely unknown. Primary rat alveolar epithelial type II cells (ATII) exposed to graded hypoxia for 24 and 48 h caused a dose-dependent induction of cell cycle arrest and suppression of proliferation, which were comparable to the effects of angiotensin II, a potent inducer of ATII cell death. Hypoxia-induced changes in ATII homeostasis are thought to proceed primarily via activation of hypoxia inducible-factor (HIF)-1α, because hypoxia increased HIF-1α protein expression, nuclear translocation, and transactivation of its specific DNA binding domain, the hypoxia responsive element (HRE). Under hypoxic conditions, expression of the proapoptotic protein Bnip3L, which belongs to the Bcl 2 family and is known to be one of the HIF-1-dependent target genes, was upregulated. Suppression of HIF-1α or Bnip-3L with small interfering RNA (siRNA) fully blocked the hypoxia-induced apoptosis and Bnip3L expression. In line with these data, overexpression of HIF-1α by transient transfection enhanced the hypoxia-induced apoptosis. Thus, we conclude that hypoxia suppresses alveolar epithelial cell proliferation and enhances ATII apoptosis through activation of the HIF-1α/HRE axis and a mechanism that involves Bnip3L. Targeting HIF-1α may represent a new strategy that could impede the alveolar denudation that is observed in several lung diseases.