Prolyl hydroxylase domain protein 2 (PHD2) (also known as EGLN1) is a key oxygen sensor in mammals that posttranslationally modifies hypoxia-inducible factor α (HIF-α) and targets it for degradation. In addition to its catalytic domain, PHD2 contains an evolutionarily conserved zinc finger domain, which we have previously proposed recruits PHD2 to the HSP90 pathway to promote HIF-α hydroxylation. Here, we provide evidence that this recruitment is critical both in vitro and in vivo. We show that in vitro, the zinc finger can function as an autonomous recruitment domain to facilitate interaction with HIF-α. In vivo, ablation of zinc finger function by a C36S/C42S Egln1 knock-in mutation results in upregulation of the erythropoietin gene, erythrocytosis, and augmented hypoxic ventilatory response, all hallmarks of Egln1 loss of function and HIF stabilization. Hence, the zinc finger ordinarily performs a critical positive regulatory function. Intriguingly, the function of this zinc finger is impaired in high-altitude-adapted Tibetans, suggesting that their adaptation to high altitude may, in part, be due to a loss-of-function EGLN1 allele. Thus, these findings have important implications for understanding both the molecular mechanism of the hypoxic response and human adaptation to high altitude.