Hypoxia is a common feature of solid tumors and is associated with their malignant phenotype. The transcription factor hypoxia-inducible factor-1 (HIF-1) is a major regulator of adaptation to hypoxia and is implicated in the malignant progression of cancers. Here, we studied whether hypoxia and HIF-1 expression contribute to the development of bone metastases using a well-characterized animal model of bone metastasis in MDA-MB-231 human breast cancer cells. To study the role of hypoxia in bone metastases, we tested the effects of the fusion protein (TOP3), the oxygen-dependent degradation domain of HIF-1alpha fused with HIV-TAT, and procaspase-3. TOP3 selectively induced apoptosis in hypoxic tumor cells in vitro and significantly reduced bone metastases in vivo. We next examined the role of HIF-1 in bone metastases by establishing MDA-MB-231 cells overexpressing constitutively active or dominant-negative HIF-1alpha (MDA/CA-HIF or MDA/DN-HIF, respectively). Bone metastases of MDA/CA-HIF were significantly increased with elevated number of CD31-positive blood vessels. In contrast, bone metastases were significantly reduced in MDA/DN-HIF. Because the progression of osteolytic bone metastases is due in part to the imbalance between bone formation and bone resorption, we examined the effects of hypoxia and HIF-1 on the differentiation of osteoblasts and osteoclasts. Hypoxia and CA-HIF overexpression markedly inhibited osteoblastic differentiation, whereas hypoxia increased osteoclast-like cell formation. In conclusion, these results suggest that tumor-associated hypoxia and HIF-1 expression promote the progression of bone metastases in breast cancer. Our results also suggest that hypoxia and HIF-1 lead to the development of osteolytic bone metastases by suppressing osteoblast differentiation and promoting osteoclastogenesis.