The hypoxia inducible transcription factors (HIFs) are regulated at the level of protein stability and transcriptional activity in an oxygen-dependent manner by prolyl and asparaginyl hydroxylation, respectively. Factor inhibiting HIF (FIH-1) is the only known HIF asparaginyl hydroxylase, and targets a conserved asparaginyl residue within the C-terminal activation domain (CAD) of HIF-alpha. This represses HIF-mediated transcription by inhibiting the recruitment of p300/CBP coactivators. Recent studies have demonstrated that the function of FIH-1 relative to the HIF prolyl hydroxylases (PHDs) is not redundant, and indicate that FIH-1 is a direct oxygen sensor. This paper will address recent published and unpublished work characterising the role of asparaginyl hydroxylation in the cellular response to hypoxia. The relative oxygen affinities and hypoxic activities of FIH-1 and the PHDs will be discussed. Furthermore, in vitro and cell-based assays demonstrating some novel characteristics regarding the substrate specificity of FIH-1, and their potential biological and therapeutic relevance will be presented.