Kidneys are physiologically hypoxic due to huge oxygen consumption for tubular reabsorption. The physiological hypoxia makes the kidney an appropriate organ for sensitively detecting oxygen levels and producing erythropoietin (EPO). In preterm neonates, immature kidneys cannot produce sufficient EPO, which results in anemia of prematurity (AOP). The cause of EPO insufficiency in AOP has been unclear, therefore current therapeutic options are transfusion and injection of recombinant human EPO. This report shows that the cause of insufficient EPO production in AOP is elevated renal oxygen levels due to poor oxygen consumption by immature tubules. Neonatal mice with AOP showed low tubular transporter expression and elevated renal oxygen levels compared with those without AOP. Enhancing transporter expression in AOP mice induced renal hypoxia and EPO production. In preterm neonates, red blood cell counts, hemoglobin levels, and hematocrit levels correlated with tubular function, but not with serum creatinine, gestational age, or birth weight. Furthermore, pharmacological upregulation of hypoxia signaling ameliorated AOP in mice. These data suggest that tubular maturation with increased oxygen consumption is required for renal EPO production.