This review explores the current concepts relating the structural and functional modifications of skeletal muscle mitochondria to the molecular mechanisms activated when organisms are exposed to a hypoxic environment. In contrast to earlier assumptions it is now established that permanent or long-term exposure to severe environmental hypoxia decreases the mitochondrial content of muscle fibres. Oxidative muscle metabolism is shifted towards a higher reliance on carbohydrates as a fuel, and intramyocellular lipid substrate stores are reduced. Moreover, in muscle cells of mountaineers returning from the Himalayas, we find accumulations of lipofuscin, believed to be a mitochondrial degradation product. Low mitochondrial contents are also observed in high-altitude natives such as Sherpas. In these subjects high-altitude performance seems to be improved by better coupling between ATP demand and supply pathways as well as better metabolite homeostasis. The hypoxia-inducible factor 1 (HIF-1) has been identified as a master regulator for the expression of genes involved in the hypoxia response, such as genes coding for glucose transporters, glycolytic enzymes and vascular endothelial growth factor (VEGF). HIF-1 achieves this by binding to hypoxia response elements in the promoter regions of these genes, whereby the increase of HIF-1 in hypoxia is the consequence of a reduced degradation of its dominant subunit HIF-1α. A further mechanism that seems implicated in the hypoxia response of muscle mitochondria is related to the formation of reactive oxygen species (ROS) in mitochondria during oxidative phosphorylation. How exactly ROS interfere with HIF-1α as well as MAP kinase and other signalling pathways is debated. The current evidence suggests that mitochondria themselves could be important players in oxygen sensing.