BACKGROUND: The prolyl-hydroxylase domain family of enzymes (PHD1-3) plays an important role in the cellular response to hypoxia by negatively regulating HIF-a proteins. Disruption of this process can lead to up-regulation of factors that promote tumorigenesis. We observed decreased basal expression of PHD3 in prostate cancer tissue and tumor cell lines representing diverse tissues of origin. Furthermore, some cancer lines displayed a failure of PHD3 mRNA induction when introduced to a hypoxic environment. This study explores the mechanism by which malignancies neither basally express PHD3 nor induce PHD3 under hypoxic conditions. METHODOLOGY/PRINCIPAL FINDINGS: Using bisulfite sequencing and methylated DNA enrichment procedures, we identified human PHD3 promoter hypermethylation in prostate, breast, melanoma and renal carcinoma cell lines. In contrast, non-transformed human prostate and breast epithelial cell lines contained PHD3 CpG islands that were unmethylated and responded normally to hypoxia by upregulating PHD3 mRNA. Only treatment of cells lines containing PHD3 promoter hypermethylation with the demethylating drug 5-aza-2'-deoxycytidine significantly increased the expression of PHD3. CONCLUSIONS/SIGNIFICANCE: We conclude that expression of PHD3 is silenced by aberrant CpG methylation of the PHD3 promoter in a subset of human carcinoma cell lines of diverse origin and that this aberrant cytosine methylation status is the mechanism by which these cancer cell lines fail to upregulate PHD3 mRNA. We further show that a loss of PHD3 expression does not correlate with an increase in HIF-1a protein levels or an increase in the transcriptional activity of HIF, suggesting that loss of PHD3 may convey a selective advantage in some cancers by affecting pathway(s) other than HIF