PHD1 catalyzes the posttranslational formation of 4-hydroxyproline in hypoxia-inducible factor (HIF) alpha proteins and hydroxylates HIF-1 alpha at Pro-402 and Pro-564, and HIF-2 alpha. It functions as a cellular oxygen sensor and, under normoxic conditions, targets HIF through the hydroxylation for proteasomal degradation via the von Hippel-Lindau ubiquitylation complex. It may play a role in cell growth regulation.