Hypoxia-inducible factor 1 (HIF-1) is a heterodimeric basic helix-loop-helix transcription factor that regulates hypoxia-inducible genes including the human erythropoietin (EPO) gene. In this study, we report structural features of the HIF-1alpha subunit that are required for heterodimerization, DNA binding, and transactivation. The HIF-1alpha and HIF-1beta (ARNT; aryl hydrocarbon receptor nuclear translocator) subunits were coimmunoprecipitated from nuclear extracts, indicating that these proteins heterodimerize in the absence of DNA. In vitro-translated HIF-1alpha and HIF-1beta generated a HIF-1/DNA complex with similar electrophoretic mobility and sequence specificity as HIF-1 present in nuclear extracts from hypoxic cells. Compared to 826-amino acid, full-length HIF-1alpha, amino acids 1-166 mediated heterodimerization with HIF-1beta (ARNT), but amino acids 1-390 were required for optimal DNA binding. A deletion involving the basic domain of HIF-1alpha eliminated DNA binding without affecting heterodimerization. In cotransfection assays, forced expression of recombinant HIF-1alpha and HIF-1beta (ARNT) activated transcription of reporter genes containing EPO enhancer sequences with intact, but not mutant, HIF-1 binding sites. Deletion of the carboxy terminus of HIF-1alpha (amino acids 391-826) markedly decreased the ability of recombinant HIF-1 to activate transcription. Overexpression of a HIF-1alpha construct with deletions of the basic domain and carboxy terminus blocked reporter gene activation by endogenous HIF-1 in hypoxic cells.