Hydroxylates a specific proline found in each of the oxygen-dependent degradation (ODD) domains (N-terminal, NODD, and C-terminal, CODD) of HIF1A. Also hydroxylates HIF2A. Has a preference for the CODD site for both HIF1A and HIF2A. Hydroxylated HIFs are then targeted for proteasomal degradation via the von Hippel-Lindau ubiquitination complex. Under hypoxic conditions, the hydroxylation reaction is attenuated allowing HIFs to escape degradation resulting in their translocation to the nucleus, heterodimerization with HIF1B, and increased expression of hypoxy-inducible genes. EGLN2 is involved in regulating hypoxia tolerance and apoptosis in cardiac and skeletal muscle. Also regulates susceptibility to normoxic oxidative neuronal death. Links oxygen sensing to cell cycle and primary cilia formation by hydroxylating the critical centrosome component CEP192 which promotes its ubiquitination and subsequent proteasomal degradation. Hydroxylates IKBKB, mediating NF-kappaB activation in hypoxic conditions. Target proteins are preferentially recognized via a LXXLAP motif. Cellular oxygen sensor that catalyzes, under normoxic conditions, the post-translational formation of 4-hydroxyproline in hypoxia-inducible factor (HIF) alpha proteins.