Hypoxia inducible factor-1 (HIF-1) is the master transcriptional regulator of the cellular response to altered oxygen levels. HIF-1α protein is elevated in most solid tumors and contributes to poor disease outcome by promoting tumor progression, metastasis, and resistance to chemotherapy. To date, the relationship between HIF-1 and these processes, particularly chemoresistance, has remained largely unexplored. Here, we show that expression of the MAPK-specific phosphatase dual-specificity phosphatase-2 (DUSP2) is markedly reduced or completely absent in many human cancers and that its level of expression inversely correlates with that of HIF-1α and with cancer malignancy. Analysis of human cancer cell lines indicated that HIF-1α inhibited DUSP2 transcription, which resulted in prolonged phosphorylation of ERK and, hence, increased chemoresistance. Knockdown of DUSP2 increased drug resistance under normoxia, while forced expression of DUSP2 abolished hypoxia-induced chemoresistance. Further, reexpression of DUSP2 during cancer progression caused tumor regression and markedly increased drug sensitivity in mice xenografted with human tumor cell lines. Furthermore, a variety of genes involved in drug response, angiogenesis, cell survival, and apoptosis were found to be downregulated by DUSP2. Our results demonstrate that DUSP2 is a key downstream regulator of HIF-1-mediated tumor progression and chemoresistance. DUSP2 therefore may represent a novel drug target of particular relevance in tumors resistant to conventional chemotherapy.