Cholesterol synthesis is a highly oxygen-dependent process. Paradoxically, hypoxia is correlated with an increase in cellular and systemic cholesterol levels and risk of cardiovascular diseases. The mechanism for the increase in cholesterol during hypoxia is unclear. Hypoxia signaling is mediated through hypoxia-inducible factor 1α (HIF-1α) and HIF-2α. The present study demonstrates that activation of HIF signaling in the liver increases hepatic and systemic cholesterol levels due to a decrease in the expression of cholesterol hydroxylase CYP7A1 and other enzymes involved in bile acid synthesis. Specifically, activation of hepatic HIF-2α (but not HIF-1α) led to hypercholesterolemia. HIF-2α repressed the circadian expression of Rev-erbα, resulting in increased expression of E4BP4, a negative regulator of Cyp7a1. To understand if HIF-mediated decrease in bile acid synthesis is a physiologically relevant pathway by which hypoxia maintains or increases systemic cholesterol levels, two hypoxic mouse models were assessed, an acute lung injury model and mice exposed to 10% O2 for 3 weeks. In both models, cholesterol levels increased with a concomitant decrease in expression of genes involved in bile acid synthesis. The present study demonstrates that hypoxic activation of hepatic HIF-2α leads to an adaptive increase in cholesterol levels through inhibition of bile acid synthesis.