It has been proposed that hydroxyl radicals (·OH) generated in a perinuclear iron-dependent Fenton reaction are involved in O₂-dependent gene expression. Thus, it was the aim of this study to localize the cellular compartment in which the Fenton reaction takes place and to determine whether scavenging of ·OH can modulate hypoxia-inducible factor 1 (HIF-1)-dependent gene expression. The Fenton reaction was localized by using the nonfluorescent dihydrorhodamine (DHR) 123 that is irreversibly oxidized to fluorescent rhodamine 123 while scavenging ·OH together with gene constructs allowing fluorescent labeling of mitochondria, endoplasmic reticulum (ER), Golgi apparatus, peroxisomes, or lysosomes. A 3D two-photon confocal laser scanning microscopy showed ·OH generation in distinct hot spots of perinuclear ER pockets. This ER-based Fenton reaction was strictly pO₂-dependent. Further colocalization experiments showed that the O₂-sensitive transcription factor HIF-1α was present at the ER under normoxia, whereas HIF-1α was present only in the nucleus under hypoxia. Inhibition of the Fenton reaction by the ·OH scavenger DHR attenuated HIF-prolyl hydroxylase activity and interaction with von Hippel–Lindau protein, leading to enhanced HIF-1α levels, HIF-1α transactivation, and activated expression of the HIF-1 target genes plasminogen activator inhibitor 1 and heme oxygenase 1. Further, ·OH scavenging appeared to enhance redox factor 1 (Ref-1) binding and, thus, recruitment of p300 to the transactivation domain C because mutation of the Ref-1 binding site cysteine 800 abolished DHR-induced transactivation. Thus, the localized Fenton reaction appears to impact the expression of hypoxia-regulated genes by means of HIF-1α stabilization and coactivator recruitment.