The major consumers of oxygen in the cell are mitochondria. Here we identified an oxygen-sensitive regulation of TFAM, a key activator of mitochondrial transcription and replication. TFAM is hydroxylated by EglN3 on proline 53/56 and subsequently bound by the tumor suppressor von Hippel Lindau (pVHL). pVHL binding stabilizes TFAM by preventing mitochondrial LON proteolysis. Cells lacking wild-type VHL or in which EglN3 was inactivated genetically or by lack of oxygen have reduced mitochondria. All VHL cancer syndrome mutations tested, type 1, 2A, 2B, 2C, failed to bind hydroxylated TFAM, regardless of whether they have the ability to bind hydroxylated HIFa or not. In contrast, VHL-R200W polycythemia-mutation bound hydroxylated TFAM similar as wild-type VHL. VHL-R200W causes polycythemia with total absence of tumor development, despite increased HIFa signaling. Tumors of VHL related malignancies such as pheochromocytoma and renal carcinoma cells show low mitochondrial content, implicating that impaired mitochondrial biogenesis is linked to the malignancies of the VHL hereditary cancer syndrome.