The pulmonary circulation plays a major role in the metabolism of angiotensin I (AI) and bradykinin through the activity of endothelial cell membrane-bound dipeptidylcarboxypeptidase, converting enzyme of kininase II. This report describes studies which investigate the effects of hypoxia on the function of converting enzyme in vivo in dogs and in endothelial cells in culture. Pulmonary converting enzyme function was assessed by both a blood pressure response technique and radioimmunoassay of bradykinin. Conversion of AI in vivo is decreased during acute alveolar hypoxia. At a PaO2 of 30 mmHg, conversion of AI is decreased to one-half control values. This decrease in AI conversion could not be related to hemodynamic factors in the pulmonary vasculature induced by hypoxia. Clearance of bradykinin by lung converting enzyme decreased from 96% at PaO2 levels above 95 torr to 0% below 26 torr. Hypoxic inhibition of enzyme activity was rapid in onset (less than 2 min), was closely correlated with PaO2 (r = 0.92, p less than 0.001) and reversible within 2 min after return to room air breathing. Converting enzyme activity of the systemic vascular bed also is inhibited by hypoxia. Converting enzyme activity also was studied by adding bradykinin or AI to endothelial cells in culture flasks and measuring residual peptide over time by radioimmunoassay. Hypoxia rapidly (less than 2 min) decreased enzyme activity and room air restored it rapidly. There was no enzyme activity below a PO2 of 30 mmHg. Hypoxia does not affect the activity of purified converting enzyme free of the endothelial cell. Metabolic and respiratory acidosis, as well as metabolic and respiratory alkalosis, had no significant effect on converting enzyme function in vivo in intact animals. While converting enzyme is resistant to a number of pathophysiological insults, it is extraordinarily responsive to acute hypoxia which may have important implications for systemic vasomotor control in conditions associated with clinical hypoxia and hypoxemia.