Hypoxia occurs during the development of placenta in the first trimester and is implicated in trophoblast differentiation. Intervillous blood flow increases after 10 wk of gestation and results in exposure of trophoblast cells to oxygen. Before this time, low oxygen appears to prevent trophoblast differentiation toward an invasive phenotype. The oxygen-regulated early events of trophoblast differentiation are mediated by TGF-beta3. TGF-beta3 plays a vital role in trophoblast differentiation, and its overexpression can be found in preeclamptic placenta. We sought to determine the mechanism of TGF-beta3 expression through hypoxia-inducible factor (HIF)-1. We show that HIF-1alpha and TGF-beta3 are overexpressed in preeclamptic placenta. Hypoxia not only transactivates the TGF-beta3 promoter activity but also enhances endogenous TGF-beta3 expression. Using the TGF-beta3 promoter deletion mutants, we show that the region between -90 and -60, which contains a putative HIF-1 consensus motif, is crucial for HIF-1-mediated transactivation. Electrophoretic mobility shift assays show that HIF-1 binds to the oligonucleotide containing the HIF-1 motif. Also, introduction of an antisense oligonucleotide for HIF-1 diminishes TGF-beta3 expression during hypoxia, indicating that the up-regulation of TGF-beta3 by hypoxia is mediated through HIF-1. Our results provide evidence that regulation of TGF-beta3 promoter activity by HIF-1 represents a mechanism for trophoblast differentiation during hypoxia.