Hypoxia-inducible factor 1 (HIF-1) is a potent tumorigenic factor. Its alpha subunit (HIF-1alpha), which is tightly regulated in normal tissues, is elevated in tumors due to hypoxia and overactive growth signaling pathways. Although much is known about HIF-1alpha regulation in cancer cells, crucial molecular targets that affect HIF-1alpha levels modulated by both hypoxia and oncogenic signaling pathways remain to be identified. Additionally, whether and how the tumor microenvironment contributes to HIF-1alpha accumulation is unclear. This study shows a novel mechanism by which HIF-1alpha availability is regulated in both cancer cells and in myeloid cells in the tumor microenvironment. We show a requirement of signal transducer and activator of transcription 3 (Stat3) for HIF-1alpha RNA expression under both hypoxia and growth signaling conditions. Furthermore, tumor-derived myeloid cells express elevated levels of HIF-1alpha mRNA relative to their counterparts from normal tissues in a Stat3-dependent manner. Additionally, Stat3 activity in the nontransformed cells in the tumor milieu affects HIF-1alpha RNA expression of the entire growing tumor. Consistent with a role of Stat3 in regulating HIF-1alpha RNA transcription, elevated Stat3 activity increases HIF-1alpha promoter activity, and Stat3 protein binds to the HIF-1alpha promoter in both transformed cells and in growing tumors. Taken together, these findings show a novel mode by which HIF-1alpha is regulated not only in cancer cells but also in the tumor-associated inflammatory cells, suggesting Stat3 as an important molecular target for inhibiting the oncogenic potential of HIF-1 induced by both hypoxia and overactive growth signaling pathways prevalent in cancer.