Mitochondrial respiration is responsible for more than 90% of oxygen consumption in humans. Cells utilize oxygen as the final electron acceptor in the aerobic metabolism of glucose to generate ATP which fuels most active cellular processes. Consequently, a drop in tissue oxygen levels to the point where oxygen demand exceeds supply (termed hypoxia) leads rapidly to metabolic crisis and represents a severe threat to ongoing physiological function and ultimately, viability. Because of the central role of oxygen in metabolism, it is perhaps not surprising that we have evolved an efficient and rapid molecular response system which senses hypoxia in cells, leading to the induction of an array of adaptive genes which facilitate increased oxygen supply and support anaerobic ATP generation. This response is governed by HIF (hypoxia-inducible factor). The oxygen sensitivity of this pathway is conferred by a family of hydroxylases which repress HIF activity in normoxia allowing its rapid activation in hypoxia. Because of its importance in a diverse range of disease states, the mechanism by which cells sense hypoxia and transduce a signal to the HIF pathway is an area of intense investigation. Inhibition of mitochondrial function reverses hypoxia-induced HIF leading to speculation of a role for mitochondria in cellular oxygen sensing. However, the nature of the signal between mitochondria and oxygen-sensing hydroxylase enzymes has remained controversial. In the present review, two models of the role for mitochondria in oxygen sensing will be discussed and recent evidence will be presented which raises the possibility that these two models which implicate ROS (reactive oxygen species) and oxygen redistribution respectively may complement each other and facilitate rapid and dynamic activation of the HIF pathway in hypoxia.