Cell growth, proliferation, differentiation and survival are influenced by the availability of oxygen. The effect of hypoxia on embryonic cells and the underlying molecular mechanisms to maintain cellular viability are still poorly understood. In this study, we show that hypoxia during Xenopus embryogenesis rapidly leads to a significant developmental delay and to cell apoptosis after prolonged exposure. We provide strong evidence that hypoxia does not affect somitogenesis but affects the number of mitotic cells and muscle-specific protein accumulation in somites, without interfering with the expression of MyoD and MRF4 transcription factors. We also demonstrate that hypoxia reversibly decreases Akt phosphorylation and increases the total amount of the translational repressor 4E-BP, in combination with an increase of the 4E-BP associated with eIF4E. Interestingly, the inhibition of PI3-kinase or mTOR, with LY29002 or rapamycin, respectively, triggers the 4E-BP accumulation in Xenopus embryos. Finally, the overexpression of the non-phosphorylatable 4E-BP protein induces, similar to hypoxia, a decrease in mitotic cells and a decrease in muscle-specific protein accumulation in somites. Taken together, our studies suggest that 4E-BP plays a central role under hypoxia in promoting the cap-independent translation at the expense of cap-dependent translation and triggers specific defects in muscle development.