Cells undergo a variety of biological responses when placed in hypoxic conditions, including alterations in metabolic state and growth rate. Here we investigated the effect of hypoxia on the ability of myogenic cells to differentiate in culture. Exposure of myoblasts to hypoxia strongly inhibited multinucleated myotube formation and the expression of differentiation markers. We showed that hypoxia reversibly inhibited MyoD, Myf5, and myogenin expression. One key step in skeletal muscle differentiation involves the up-regulation of the cell cycle-dependent kinase inhibitors p21 and p27 as well as the product of the retinoblastoma gene (pRb). Myoblasts cultured under hypoxic conditions in differentiation medium failed to up-regulate both p21 and pRb despite the G1 cell cycle arrest, as evidenced by p27 accumulation and pRb hypophosphorylation. Hypoxia-dependent inhibition of differentiation was associated with MyoD degradation by the ubiquitin-proteasome pathway. MyoD overexpression in C2C12 myoblasts overrode the differentiation block imposed by hypoxic conditions. Thus, hypoxia by inducing MyoD degradation blocked accumulation of early myogenic differentiation markers such as myogenin and p21 and pRb, preventing both permanent cell cycle withdraw and terminal differentiation. Our study revealed a novel anti-differentiation effect exerted by hypoxia in myogenic cells and identified MyoD degradation as a relevant target of hypoxia.