Prolyl-4-hydroxylase domain (PHD) proteins are 2-oxoglutarate and dioxygen-dependent enzymes that mediate the rapid destruction of hypoxia-inducible factor ␣ subunits. Whereas PHD1 and PHD3 proteolysis has been shown to be regulated by Siah2 ubiquitin E3 ligase-mediated polyubiquitylation and proteasomal destruction, protein regulation of the main oxygen sensor responsible for hypoxia-inducible factor ␣ regulation, PHD2, remained unknown. We recently reported that the FK506-binding protein (FKBP) 38 specifically interacts with PHD2 and determines PHD2 protein stability in a peptidylprolyl cis-trans isomerase-independent manner. Using peptide array binding assays, fluorescence spectroscopy, and fluorescence resonance energy transfer analysis, we defined a minimal linear glutamate-rich PHD2 binding domain in the N-terminal part of FKBP38 and showed that this domain forms a high affinity complex with PHD2. Vice versa, PHD2 interacted with a nonlinear N-terminal motif containing the MYND (myeloid, Nervy, and DEAF-1)-type Zn 2؉ finger domain with FKBP38. Biochemical fractionation and immunofluorescence analysis demonstrated that PHD2 subcellular localization overlapped with FKBP38 in the endoplasmic reticulum and mitochondria. An additional fraction of PHD2 was found in the cytoplasm. In cellulo PHD2/FKBP38 association, as well as regulation of PHD2 protein abundance by FKBP38, is dependent on membraneanchored FKBP38 localization mediated by the C-terminal transmembrane domain. Mechanistically our data indicate that PHD2 protein stability is regulated by a ubiquitin-independent proteasomal pathway involving FKBP38 as adaptor protein that mediates proteasomal interaction. We hypothesize that FKBP38-bound PHD2 is constantly degraded whereas cytosolic PHD2 is stable and able to function as an active prolyl-4-hydroxylase.The heterodimeric ␣/ transcription factor complexes of hypoxia-inducible factors (HIFs) 4 are central regulators of the cellular, local, and systemic response to reduced oxygen partial pressure (pO 2 ) (1, 2). Under normoxic conditions, two highly conserved prolyl residues within the oxygen-dependent degradation domain of HIF␣ subunits are hydroxylated by members of the prolyl-4-hydroxylase domain (PHD) family (also called egg laying-defective nine homolog (EGLN) or HIF prolyl hydroxylase) (3-5). Hydroxylated prolines are then bound by an E3 ubiquitin ligase complex containing the von Hippel-Lindau tumor suppressor protein (pVHL) as recognition subunit, mediating polyubiquitylation and proteasomal degradation of HIF␣ subunits (6 -8). In addition, factor inhibiting HIF hydroxylates under normoxic conditions an asparaginyl residue in the C-terminal transcriptional transactivation domain of HIF␣ subunits, preventing the association with the CH1 domain of the p300 and cAMP-responsive element-binding protein-binding protein (CBP) co-activators (9, 10). PHDs and factor inhibiting HIF belong to the 2-oxoglutarate-and irondependent dioxygenase superfamily and act as cellular oxygen sensors by correlating the ...