Although hypoxia-inducible factor-alpha (HIFalpha) subunit-specific hydroxylation and proteolytic breakdown explain the binary switch between the presence (hypoxia) and absence (normoxia) of HIFs, little is known of the mechanisms that fine-tune HIF activity under constant, rather than changing, oxygen tensions. Here, we report that the Drosophila HIFalpha homolog, the basic helix-loop-helix/PAS protein Sima ((Sim) under bar il (a) under barr), in hypoxic cultures of SL2 cells is expressed in full-length (fl) and splice variant (sv) isoforms. The following evidence supports the role of flSima as functional HIFalpha and the role of SL2 HIF as a transcriptional activator or suppressor. The pO(2) dependence of Sima abundance matched that of HIF activity. HIF-dependent changes in candidate target gene expression were detected through variously effective stimuli: hypoxia (strong) > iron chelation, e. g. desferrioxamine (moderate) much greater than transition metals, e. g. cobalt similar or equal to normoxia (ineffective). Sima overexpression augmented hypoxic induction or suppression of different targets. In addition to the full-length exon 1-12 transcript yielding the 1510-amino acid HIFalpha homolog, the sima gene also expressed, specifically under hypoxia, an exon 1-7/12 splice variant, which translated into a 426-amino acid Sima truncation termed svSima. svSima contains basic helix-loop-helix and PAS sequences identical to those of flSima, but, because of deletion of exons 8-11, lacks the oxygen-dependent degradation domain and nuclear localization signals. Overexpressed svSima failed to transactivate reporter genes. However, it attenuated HIF (Sima.Tango)-stimulated reporter expression in a dose-dependent manner. Thus, svSima has the potential to regulate Drosophila HIF function under steady and hypoxic pO(2) by creating a cytosolic sink for the Sima partner protein Tango.