Microphthalmia-associated transcription factor (MITF) regulates normal melanocyte development and is also a lineage-selective oncogene implicated in melanoma and clear-cell sarcoma (i.e., melanoma of soft parts). We have observed that MITF expression is potently reduced under hypoxic conditions in primary melanocytes and melanoma and clear cell sarcoma cells through hypoxia inducible factor 1 (HIF1)-mediated induction of the transcriptional repressor differentially expressed in chondrocytes protein 1 (DEC1) (BHLHE40), which subsequently binds and suppresses the promoter of M-MITF (melanocyte-restricted MITF isoform). Correspondingly, hypoxic conditions or HIF1α stabilization achieved by using small-molecule prolyl-hydroxylase inhibitors reduced M-MITF expression, leading to melanoma cell growth arrest that was rescued by ectopic expression of M-MITF in vitro. Prolyl hydroxylase inhibition also potently suppressed melanoma growth in a mouse xenograft model. These studies illuminate a physiologic hypoxia response in pigment cells leading to M-MITF suppression, one that suggests a potential survival advantage mechanism for MITF amplification in metastatic melanoma and offers a small-molecule strategy for suppression of the MITF oncogene in vivo.