Post-translational modification of proteins with ubiquitin-like SUMO modifiers is a tightly regulated and highly dynamic process. The SENP family of SUMO-specific isopeptidases comprises six cysteine proteases. They are instrumental in counterbalancing SUMO conjugation, but their regulation is not well understood. We demonstrate that in hypoxic cell extracts, the catalytic activity of SENP family members, in particular SENP1 and SENP3, is inhibited in a rapid and fully reversible process. Comparative mass spectrometry from normoxic and hypoxic cells defines a subset of hypoxia-induced SUMO1 targets, including SUMO ligases RanBP2 and PIAS2, glucose transporter 1, and transcriptional regulators. Among the most strongly induced targets, we identified the transcriptional co-repressor BHLHE40, which controls hypoxic gene expression programs. We provide evidence that SUMOylation of BHLHE40 is reversed by SENP1 and contributes to transcriptional repression of the metabolic master regulator gene PGC-1α. We propose a pathway that connects oxygen-controlled SENP activity to hypoxic reprogramming of metabolism.