Hypoxia Inducible Factor 1 (HIF-1) promotes fibrosis and inflammation in adipose tissues, while estrogens and Estrogen Receptor α (ERα) have the opposite effect. Here we identify an Estrogen Response Element (ERE) in the promoter of Phd3, which is a negative regulatory enzyme of HIF-1, and we demonstrate HIF-1α is ubiquitinated following 17-β estradiol (E2)/ERα mediated Phd3 transcription. Manipulating ERα in vivo increases Phd3 transcription and reduces HIF-1 activity, while addition of PHD3 ameliorates adipose tissue fibrosis and inflammation. Our findings outline a novel regulatory relationship between E2/ERα, PHD3 and HIF-1 in adipose tissues, providing a mechanistic explanation for the protective effect of E2/ERα in adipose tissue.