Erythropoietin (Epo) is produced from the kidney and liver under anemic and/or hypoxic conditions. This inducible and tissue-specific production of Epo is regulated at the Epo gene transcription level. To elucidate the mechanisms how hypoxia inducible gene expression is regulated, a number of studies have been carried out and the function of the hypoxia-responsible enhancer sequence located in the 3′ flanking region of the Epo gene (3′HRE) were identified using the Epo-producing human hepatoma cell lines, Hep3B and HepG2. In order to clarify in vivo function of 3′HRE, in this study we deleted 500-bp mouse genomic region (referred to as BS region) containing 3′HRE by the gene targeting strategy. The homozygous BS-null mutant neonates suffered from severe anemia (hematocrit 17±2%) compared with wild-type neonate (hematocrit 28±2%). This anemic phenotype was observed from embryonic day 15 (E15). To our surprise, however, erythropoiesis in the adult BS-null mice was within the normal range. We then examined the expression level of Epo gene in the kidney and liver of BS-null mouse line in the embryonic stage, and found that the Epo gene expression was completely silenced in the BS-null embryonic liver after E15 to adulthood. The BS deletion did not affect the Epo gene expression in the liver up to midgestation stage (E10 to E13) and in the kidney throughout life. These results thus demonstrate that the BS region including 3′HRE is the enhancer for Epo gene that is functional after the late embryonic stage and in the hepatocytes. BS-null mice also showed that the hepatic erythropoiesis in the embryonic and neonatal stages requires the paracrine Epo secretion from the hepatocytes, and the Epo production in the kidney is insufficient to compensate the loss of hepatic Epo production.