Hypoxia plays an important role in the proliferation, differentiation and maintenance of the cardiovascular system during development. While low oxygen tension appears to direct the cultured embryonic stem cells (ESCs) to differentiate into cardiomyocytes, the underlying molecular mechanism remains unclear. At a molecular level, hypoxia inducible factor-1 (HIF-1) plays an important role in handling the hypoxia signal. In the present study, we demonstrated that expression of exogenous HIF-1 alpha cDNA into murine ESCs significantly promoted cardiogenesis as indicated by a higher percentage of beating embryoid body and troponin-T positive cell counts as well as increased expression of early and late cardiac markers, such as GATA-binding protein 4 and 6, NK2 transcription factor related locus 5, alpha-myosin heavy chain, beta-myosin heavy chain and myosin light chain 2 ventricular transcripts. In addition, the transduced cells exhibited increased mRNA levels of cardiotrophin-1 and vascular endothelial growth factor, along with phosphorylation of eNOS [p-eNOS (ser1171)]. Application of NOS inhibitors, diphenyleneiodonium chloride (DPI), N(omega)-Nitro-L-arginine methyl ester hydrochloride (L-NAME) or N(omega)-Nitro-L-arginine (L-NNA) abolished the HIF-1 alpha stimulated cardiac differentiation. With the clues of upregulated mRNA expression of calcium handling proteins, ryanodine receptor 2, sodium calcium exchanger and sarcoplasmic/endoplasmic reticulum calcium ATPase, in the transduced HIF-1 alpha ESCs, further study indicated that the maximum upstroke and decay velocity was significantly increased in both non-caffeine and caffeine-induced calcium transient in ESCs-derived cardiomyocytes. This suggests a well developed function of the sarcoplasmic reticulum in ESC-derived cardiomyocytes. Electrophysiological study also indicated that a portion of the HIF-1 alpha-transduced cells exhibited prominent phase-4 depolarization. These findings suggest that keen activation of the HIF-1 pathway enhances differentiation and maturation of cardiomyocytes derived from ESCs.