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Breakdown or absence of vascular oxygen delivery is a hallmark of many common human diseases, including cancer, myocardial infarction, and stroke. The chief mediator of hypoxic response in mammalian tissues is the transcription factor hypoxia-inducible factor 1 (HIF-1), and its oxygen-sensitive component HIF-1alpha. A key question surrounding HIF-1alpha and the hypoxic response is the role of this transcription factor in cells removed from a functional vascular bed; in this regard there is evidence indicating that it can act as either a survival factor or induce growth arrest and apoptosis. To study more closely how HIF-1alpha functions in hypoxia in vivo, we used tissue-specific targeting to delete HIF-1alpha in an avascular tissue: the cartilaginous growth plate of developing bone. We show here the first evidence that the developmental growth plate in mammals is hypoxic, and that this hypoxia occurs in its interior rather than at its periphery. As a result of this developmental hypoxia, cells that lack HIF-1alpha in the interior of the growth plate die. This is coupled to decreased expression of the CDK inhibitor p57, and increased levels of BrdU incorporation in HIF-1alpha null growth plates, indicating defects in HIF-1alpha-regulated growth arrest occurs in these animals. Furthermore, we find that VEGF expression in the growth plate is regulated through both HIF-1alpha-dependent and -independent mechanisms. In particular, we provide evidence that VEGF expression is up-regulated in a HIF-1alpha-independent manner in chondrocytes surrounding areas of cell death, and this in turn induces ectopic angiogenesis. Altogether, our findings have important implications for the role of hypoxic response and HIF-1alpha in development, and in cell survival in tissues challenged by interruption of vascular flow; they also illustrate the complexities of HIF-1alpha response in vivo, and they provide new insights into mechanisms of growth plate development.