Hypoxia is a common feature of solid tumors and is associated with poor patient prognosis, therapy resistance and metastasis. Radiobiological hypoxia (<0.1% O2) is one of the few physiologically relevant stresses that activates both the replication stress/DNA damage response and the unfolded protein response. Recently, we found that hypoxia also leads to the robust accumulation of R-loops, which led us to question here both the mechanism and consequence of hypoxia-induced R-loops. Interestingly, we found that the mechanism of R-loop accumulation in hypoxia is dependent on non-DNA damaging levels of reactive oxygen species. We show that hypoxia-induced R-loops play a critical role in the transcriptional stress response, evidenced by the repression of ribosomal RNA synthesis and the translocation of nucleolin from the nucleolus into the nucleoplasm. Upon depletion of R-loops, we observed a rescue of both rRNA transcription and nucleolin translocation in hypoxia. Mechanistically, R-loops accumulate on the rDNA in hypoxia and promote the deposition of heterochromatic H3K9me2 which leads to the inhibition of Pol I-mediated transcription of rRNA. These data highlight a novel mechanistic insight into the hypoxia-induced transcriptional stress response through the ROS-R-loop-H3K9me2 axis. Overall, this study highlights the contribution of transcriptional stress to hypoxia-mediated tumorigenesis.