A key function of blood vessels, to supply oxygen, is impaired in tumors because of abnormalities in their endothelial lining. PHD proteins serve as oxygen sensors and may regulate oxygen delivery. We therefore studied the role of endothelial PHD2 in vessel shaping by implanting tumors in PHD2(+/-) mice. Haplodeficiency of PHD2 did not affect tumor vessel density or lumen size, but normalized the endothelial lining and vessel maturation. This resulted in improved tumor perfusion and oxygenation and inhibited tumor cell invasion, intravasation, and metastasis. Haplodeficiency of PHD2 redirected the specification of endothelial tip cells to a more quiescent cell type, lacking filopodia and arrayed in a phalanx formation. This transition relied on HIF-driven upregulation of (soluble) VEGFR-1 and VE-cadherin. Thus, decreased activity of an oxygen sensor in hypoxic conditions prompts endothelial cells to readjust their shape and phenotype to restore oxygen supply. Inhibition of PHD2 may offer alternative therapeutic opportunities for anticancer therapy.