Early placental development occurs in an environment of relative hypoxia. Hypoxia promotes angiogenesis and up-regulates vascular endothelial growth factor (VEGF) expression while it down-regulates placenta growth factor (PIGF) that possess 53% homology with VEGF. Morphological studies show poor placental vascular development and an increase in the mitotic index of cytotrophoblasts in intrauterine growth restriction (IUGR). We hypothesized that the reported relatively high oxygen level in the intervillous space in contact with IUGR placental villi will limit angiogenesis by changes in VEGF and PIGF expression and function. Western immunoblot analysis demonstrates a diametric expression of PIGF and VEGF proteins throughout pregnancy with PIGF levels increasing and VEGF levels decreasing, consistent with placental oxygenation. In IUGR placentae, the ratio of PIGF/GAPDH mRNA was increased by 2.3-fold (p < 0.03) and PIGF protein levels were also increased, (p < 0.05) as compared with gestationally-matched normal placentae. PIGF mRNA and protein were localized to the trophoblast bilayer and villous mesenchyme of the human placenta throughout gestation. In vitro studies demonstrated that increasing oxygen tension (hyperoxia) up-regulated PIGF protein in term placental villous explants, whereas hypoxic culture of a term trophoblast choriocarcinoma cell line (BeWo) down-regulated PIGF mRNA and protein and VEGFR-1 (Flt-1) autophosphorylation. The addition of PIGF-1 to a spontaneously transformed first trimester cytotrophoblast cell line stimulated DNA synthesis while PIGF-2 had little effect. VEGF and PIGF exert their biological actions by means of a common receptor VEGFR-1. In the first trimester trophoblast cells, PIGF-1 increased the association of phosphorylated extracellular signal-related kinase (ERK) with VEGFR-1 immunoprecipitates while both PIGF-1 and PIGF-2 also potentiated endogenous VEGF mediated association of phosphorylated extracellular related kinase (ERK) with VEGFR-2 (KDR). More importantly, the addition of PIGF-1 had little effect while PIGF-2 inhibited cell growth in cultured endothelial cells derived from human umbilical vein. Nitric oxide (NO) is reported to promote angiogenesis and PIGF-2 inhibited the basal release of NO from the first trimester trophoblast. The tissue expression and functional studies support the hypothesis of "placental hyperoxia" in early-onset IUGR because hypoxia down-regulates trophoblast PIGF levels, PIGF expression is increased in IUGR, and PIGF-2 inhibits endothelial cell growth. Taken together, these changes provide a cellular explanation for the observed poor angiogenesis in the pathogenesis of IUGR and show that the two PIGF isoforms may modulate trophoblast and endothelial cell function differently, possibly through potentiation of VEGF mediated activation of VEGF-2.