Erythropoietin is produced by the kidney and stimulates erythropoiesis; however, in chronic renal disease its levels are reduced and patients develop anemia that is treatable with iron and recombinant hormone. The mechanism by which erythropoietin improves iron homeostasis is still unclear, but it may involve suppression of the iron regulatory peptide hepcidin and/or a direct effect on intestinal iron absorption. To investigate these possibilities, we used the well-established 5/6th nephrectomy rat model of chronic renal failure with or without human recombinant erythropoietin treatment. Monolayers of human intestinal Caco-2 cells were also treated with erythropoietin to measure any direct effects of this hormone on intestinal iron transport. Nephrectomy increased hepatic hepcidin expression and decreased intestinal iron absorption; these effects were restored to levels found in sham-operated rats on erythropoietin treatment of the rats with renal failure. In Caco-2 cells, the addition of erythropoietin significantly increased the expression of apical divalent metal transporter 1 (DMT1) and basolateral ferroportin and, consequently, iron transport across the monolayer. Taken together, our results show that erythropoietin not only exerts a powerful inhibitory action on the expression of hepcidin, thus permitting the release of iron from reticuloendothelial macrophages and intestinal enterocytes, but also acts directly on enterocytes to increase iron absorption.