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Current therapy for several forms of anemia involves a weekly regime of multiple subcutaneous injections of recombinant human erythropoietin (hEpo). In an effort to provide a physiologically regulated administration of erythropoietin, we are developing cell lines genetically engineered to release hEpo as a function of oxygen tension. C2C12 cells were transfected using a vector containing the hEpo cDNA driven by the hypoxia-responsive promoter to the murine phosphoglycerate kinase gene. In vitro, these cells showed a threefold increase in hEpo secretion as oxygen levels were shifted from 21% to 1.3% oxygen. To test in vivo response, C2C12-hEpo cells were encapsulated in a microporous membrane and implanted subcutaneously on the dorsal flank of DBA/2J mice. On average, serum hEpo levels in animals exposed to 7% oxygen were two-fold higher than values seen in their control counterparts kept at 21% oxygen. Similar studies employing rats confirmed that hEpo delivery is regulated as a function of oxygen tension. These results suggest the feasibility of developing an oxygen-regulated, encapsulated cell-based system for hEpo delivery.