Prolyl hydroxylase domain (PHD) proteins play a major role in regulating the hypoxia-inducible factor (HIF) that induces expression of genes involved in angiogenesis, erythropoiesis, and cell metabolism, proliferation, and survival. Germ-line mutations in the prolyl hydroxylase domain 2 gene (PHD2) have been reported in patients with familial erythrocytosis but not in association with tumors. We describe a patient with erythrocytosis and recurrent paraganglioma who carries a newly discovered PHD2 mutation. This mutation affects PHD2 function and stabilizes HIF-α proteins. In addition, we demonstrate loss of heterozygosity of PHD2 in the tumor, suggesting that PHD2 could be a tumor-suppressor gene.