This review describes the catalytic mechanism, substrate specificity, and structural peculiarities of alpha-ketoglutarate dependent nonheme iron dioxygenases catalyzing prolyl hydroxylation of hypoxia-inducible factor (HIF). Distinct localization and regulation of three isoforms of HIF prolyl hydroxylases suggest their different roles in cells. The recent identification of novel substrates other than HIF, namely β2-adrenergic receptor and the large subunit of RNA polymerase II, places these enzymes in the focus of drug development efforts aimed at development of isoform-specific inhibitors. The challenges and prospects of designing isoform-specific inhibitors are discussed.