Mammalian cells adapt to hypoxic conditions through a transcriptional response pathway mediated by the hypoxia-inducible factor, HIF. HIF transcriptional activity is suppressed under normoxic conditions by hydroxylation of an asparagine residue within its C-terminal transactivation domain, blocking association with coactivators. Here we show that the protein FIH-1, previously shown to interact with HIF, is an asparaginyl hydroxylase. Like known hydroxylase enzymes, FIH-1 is an Fe(II)-dependent enzyme that uses molecular O₂ to modify its substrate. Together with the recently discovered prolyl hydroxylases that regulate HIF stability, this class of oxygen-dependent enzymes comprises critical regulatory components of the hypoxic response pathway.