The mechanism by which hypoxia induces gene transcription involves the inhibition of HIF-1alpha (hypoxia-inducible factor-1 alpha subunit) PHD (prolyl hydroxylase) activity, which prevents the VHL (von Hippel-Lindau)-dependent targeting of HIF-1alpha to the ubiquitin/proteasome pathway. HIF-1alpha thus accumulates and promotes gene transcription. In the present study, first we provide direct biochemical evidence for the presence of a conserved hypoxic signalling pathway in Drosophila melanogaster. An assay for 2-oxoglutarate-dependent dioxygenases was developed using Drosophila embryonic and larval homogenates as a source of enzyme. Drosophila PHD has a low substrate specificity and hydroxylates key proline residues in the ODD (oxygen-dependent degradation) domains of human HIF-1alpha and Similar, the Drosophila homologue of HIF-1alpha. The enzyme promotes human and Drosophila [(35)S]VHL binding to GST (glutathione S-transferase)-ODD-domain fusion protein. Hydroxylation is enhanced by proteasomal inhibitors and was ascertained using an anti-hydroxyproline antibody. Secondly, by using transgenic flies expressing a fusion protein that combined an ODD domain and the green fluorescent protein (ODD-GFP), we analysed the hypoxic cascade in different embryonic and larval tissues. Hypoxic accumulation of the reporter protein was observed in the whole tracheal tree, but not in the ectoderm. Hypoxic stabilization of ODD-GFP in the ectoderm was restored by inducing VHL expression in these cells. These results show that Drosophila tissues exhibit different sensitivities to hypoxia.