Hypoxic preconditioning induces expression of Epo in the retina and protects photoreceptor cells against degeneration. We investigated the influence of the HIF-EPO system on retinal development, physiology, and neuroprotection. Photoreceptor-specific and retina-specific knockdowns of HIF1A and VHL were generated using the cre-lox system. Retinal morphology was analyzed by light microscopy. Gene and protein expression was studied by qPCR, Western blotting and immunofluorescence. The knockdown of HIF1A in adult photoreceptors reduced hypoxic expression of HIF1 target genes, but not of Epo. Photoreceptors lacking HIF1A tolerated hypoxic exposure which also protected them against degeneration by a subsequent insult. Knockdown of HIF1A in most cells of the retina already during retinal development resulted in elevated levels of HIF2A protein and of Epo mRNA and in a vascular phenotype which lacked the intermediate plexus. Normal layering of retinal cells was not affected. Knockdown of the upstream regulator VHL in photoreceptor cells activated the hypoxia response pathway in normoxic conditions. Levels of HIF1A and HIF2A were elevated and expression of several hypoxia-related genes was increased. Epo, however, remained at basal levels. Hypoxic preconditioning transiently protected photoreceptors in young adults. Prolonged activation of this pathway (1 year) resulted in retinal degeneration. Knockdown of VHL in most retinal cells resulted in severe developmental defects of the retinal vasculature and strong retinal degeneration despite a 30-fold induction of Epo gene expression. The HIF-EPO system influences retinal development, the formation of the retinal vasculature and the protection of neuronal cells.