This article summarizes recent advances in understanding the production and action of the hormone erythropoietin (Epo) with respect to high altitude physiology and sports medicine. Hypoxia is the main stimulus for Epo gene expression. An O2-labile protein (hypoxia-inducible factor 1, HIF-1) has been identified that is hydroxylated and degraded under normoxic conditions but active in hypoxia, where it enhances Epo gene transcription resulting in elevated hemoglobin levels and O2 capacity of the blood. The stimulation of Epo production at lowered arterial O2 tension can be maladaptive, if erythrocytosis develops such as seen in high altitude habitants. Within physiological limits the aerobic power increases in parallel with blood O2 capacity. Therefore, some elite athletes have misused recombinant human Epo (rhEpo), which is a beneficial anti-anemic drug in clinical practice. Indirect and direct methods to detect rhEpo doping have been recently developed.