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Iron is essential for many biological processes, including oxygen delivery, and its supply is tightly regulated. Hepcidin, a small peptide synthesized in the liver, is a key regulator of iron absorption and homeostasis in mammals. Hepcidin production is increased by iron overload and decreased by anemia and hypoxia; but the molecular mechanisms that govern the hepcidin response to these stimuli are not known. Here we establish that the von Hippel-Lindau/hypoxia-inducible transcription factor (VHL/HIF) pathway is an essential link between iron homeostasis and hepcidin regulation in vivo. Through coordinate downregulation of hepcidin and upregulation of erythropoietin and ferroportin, the VHL-HIF pathway mobilizes iron to support erythrocyte production.