We have isolated and characterized a cDNA for a novel Per-Arnt/AhR-Sim basic helix-loop-helix (bHLH-PAS) factor that interacts with the Ah receptor nuclear translocator (Arnt), and its predicted amino acid sequence exhibits significant similarity to the hypoxia-inducible factor 1alpha (HIF1alpha) and Drosophila trachealess (dTrh) gene product. The HIF1alpha-like factor (HLF) encoded by the isolated cDNA bound the hypoxia-response element (HRE) found in enhancers of genes for erythropoietin, vascular endothelial growth factor (VEGF), and various glycolytic enzymes, and activated transcription of a reporter gene harboring the HRE. Although transcription-activating properties of HLF were very similar to those reported for HIF1alpha, their expression patterns were quite different between the two factors; HLF mRNA was most abundantly expressed in lung, followed by heart, liver, and other various organs under normoxic conditions, whereas HIF1alpha mRNA was ubiquitously expressed at much lower levels. In lung development around parturition, HLF mRNA expression was markedly enhanced, whereas that of HIF1alpha mRNA remained apparently unchanged at a much lower level. Moreover, HLF mRNA expression was closely correlated with that of VEGF mRNA. Whole mount in situ hybridization experiments demonstrated that HLF mRNA was expressed in vascular endothelial cells at the middle stages (9.5 and 10.5 days postcoitus) of mouse embryo development, where HIF1alpha mRNA was almost undetectable. The high expression level of HLF mRNA in the O2 delivery system of developing embryos and adult organs suggests that in a normoxic state, HLF regulates gene expression of VEGF, various glycolytic enzymes, and others driven by the HRE sequence, and may be involved in development of blood vessels and the tubular system of lung.