The cytokine interleukin-22 (IL-22) is a potent regulator of tissue responses during inflammation. Depending on the context of inflammation, IL-22 can have protective or inflammatory effects on epithelial cells. This dual nature of IL-22 leads us to hypothesize that its activity must be exquisitely regulated to prevent host tissue damage. Environmental factors may act as a cellular cue as to how cells respond to IL-22. Inflammatory environments are characterized by low oxygen and thus we examined whether cells respond differently to IL-22 hypoxia compared with normoxia. In this study, we show that hepatocyte responses to IL-22 stimulation are reduced in hypoxic environments. IL-22 stimulation of hepatocytes incubated in low oxygen led to reduced levels of activated signal transducer and activator of transcription 3 and further downstream effects such as reduced induction of the anti-microbial protein, lipocalin-2. This modulation appears to be independent of the hypoxia-inducible factor-1α signaling pathway. Thus, hypoxia that accompanies chronic inflammation may be a mechanism to regulate the bioactivity of the dual-natured IL-22 cytokine.