Under hypoxia (experimentally induced by controlled bleeding), the kidney increases production of EPO, a growth factor that stimulates proliferation of erythroid precursors and their differentiation into mature RBCs, whereas the liver upregulates the serine protease TMPRSS6 to decrease the BMP-SMAD pathway and hepcidin expression. In erythroid precursors, activation of the EPO-dependent signaling pathway, mediated by JAK2-STAT5, increases the production of ERFE, a secreted protein that inhibits the BMP-SMAD pathway and hepcidin by sequestering the BMP ligand BMP6. ERFE reaches its maximum concentration within 24 hours (lower panel) after bleeding. The liver plays a crucial role in the hypoxia-mediated inhibition of the BMP-SMAD pathway and hepcidin through the upregulation of the newly identified “erythroid regulator” FGL1. Like ERFE, FGL1 acts upstream of the BMP-SMAD signaling by sequestering BMP6. However, the timing of FGL1 expression is delayed compared with ERFE and reaches its maximum level 1 to 3 days after bleeding. Reduced production of hepcidin promotes iron recycling and uptake of dietary iron by stabilizing the sole iron exporter ferroportin at the cell membrane of macrophages and enterocytes, respectively, thereby increasing iron entry into the bloodstream. The coordinated activity of ERFE and FGL1, which ensures efficient hepcidin downregulation (lower panel), provides all the iron required by erythroid cells for hemoglobin synthesis and RBC production. HIF, hypoxia-inducible factor.