The pandemic rise in obesity has resulted in an increased incidence of metabolic complications. Non-alcoholic fatty liver disease is the hepatic manifestation of the metabolic syndrome and has become the most common chronic liver disease in large parts of the world. The adipose tissue expansion and hepatic fat accumulation characteristics of these disorders compromise local oxygen homeostasis. The resultant tissue hypoxia induces adaptive responses to restore oxygenation and tissue metabolism and cell survival. Hypoxia-inducible factors (HIFs) function as master regulators of this hypoxia adaptive response, and are in turn hydroxylated by prolyl hydroxylases (PHDs). PHDs are the main cellular oxygen sensors and regulate HIF proteasomal degradation in an oxygen-dependent manner. HIFs and PHDs are implicated in numerous physiological and pathological conditions. Extensive research using genetic models has revealed that hypoxia signaling is also a key mechanism in adipose tissue dysfunction, leading to adipose tissue fibrosis, inflammation and insulin resistance. Moreover, hypoxia affects liver lipid metabolism and deranges hepatic lipid accumulation. This review summarizes the molecular mechanisms through which the hypoxia adaptive response affects adipocyte and hepatic metabolism, and the therapeutic possibilities of modulating HIFs and PHDs in obesity and fatty liver disease.