Erythropoietin (Epo) is essential for erythropoiesis and is mainly produced by the fetal liver and the adult kidney following hypoxic stimulation. Epo regulation is commonly studied in hepatoma cell lines, but differences in Epo regulation between kidney and liver limit the understanding of Epo dysregulation in polycythaemia and anaemia. To overcome this limitation, we have generated a novel transgenic mouse model expressing Cre recombinase specifically in the active fraction of renal Epo-producing (REP) cells. Crossing with reporter mice confirmed the inducible and highly specific tagging of REP cells, located in the corticomedullary border region where there is a steep drop in oxygen bioavailability. A novel method was developed to selectively grow primary REP cells in culture and to generate immortalized clonal cell lines, called fibroblastoid atypical interstitial kidney (FAIK) cells. FAIK cells show very early hypoxia-inducible factor (HIF)-2α induction, which precedes Epo transcription. Epo induction in FAIK cells reverses rapidly despite ongoing hypoxia, suggesting a cell autonomous feedback mechanism. In contrast, HIF stabilizing drugs resulted in chronic Epo induction in FAIK cells. RNA sequencing of three FAIK cell lines derived from independent kidneys revealed a high degree of overlap and suggests that REP cells represent a unique cell type with properties of pericytes, fibroblasts, and neurons, known as telocytes. These novel cell lines may be helpful to investigate myofibroblast differentiation in chronic kidney disease and to elucidate the molecular mechanisms of HIF stabilizing drugs currently in phase III studies to treat anemia in end-stage kidney disease.