The hypoxic response in humans is mediated by the hypoxia‐inducible transcription factor (HIF), for which prolyl hydroxylases (PHDs) act as oxygen‐sensing components. The evolutionary origins of the HIF system have been previously unclear. We demonstrate a functional HIF system in the simplest animal, Trichoplax adhaerens : HIF targets in T. adhaerens include glycolytic and metabolic enzymes, suggesting a role for HIF in the adaptation of basal multicellular animals to fluctuating oxygen levels. Characterization of the T. adhaerens PHDs and cross‐species complementation assays reveal a conserved oxygen‐sensing mechanism. Cross‐genomic analyses rationalize the relative importance of HIF system components, and imply that the HIF system is likely to be present in all animals, but is unique to this kingdom.