Transcription of the erythropoietin (epo) gene is regulated in response to tissue hypoxia. In this study we show that constructs containing 117 bp of the epo promoter sequence cloned upstream of a luciferase reporter, respond to hypoxia when transfected into the human hepatoma cell line, Hep3B. The sequence -61 to -45 (EP17) relative to the transcription start of the murine epo gene imparted an approximately 4-fold induction of reporter gene expression due to hypoxia. Internal deletion of EP17 resulted in loss of induction by hypoxia without altering basal expression of the 117 bp epo promoter reporter construct. Mutagenesis studies showed that the bases at positions -53, -59, from -49 to -51 and from -55 to -57 are essential for hypoxic induction. The EP17 sequence is required for the 3' enhancer element of the epo gene to be maximally functional. Gel shift and UV cross-linking experiments showed the presence in Hep3B nuclear extracts, of two protein factors with approximate molecular weights of 52 kDa and 25 kDa that bind to EP17. Introduction of specific mutations in the EP17 region that abolish induction by hypoxia, also eliminated the binding of one or both of these factors. These experiments demonstrate a role for the proximal region of the epo promoter in hypoxic induction of the epo gene.