Tibetans are well adapted to the hypoxic environments at high altitude. Although previous genome-wide scans have identified a large number of candidate genes harboring Tibetan-enriched sequence variants, the molecular mechanism of how these variants lead to the adaptive physiological changes in Tibetans remains largely unclear. Here we report systematic genetic and functional dissections of EPAS1, a gene encoding hypoxia inducible factor 2a (HIF-2a) with the strongest signal of selective sweep in Tibetans. We show that in Tibetan umbilical endothelial cells and placenta tissues, the Tibetan-enriched EPAS1 variants cause a down-regulation of its expression. In the mouse model, the heterozygous EPAS1 knockout mice (~50% expression reduction) perform better than the wild-type controls during prolonged hypoxic treatment, and display blunted physiological responses to chronic hypoxia, mirroring the situation in Tibetans. Furthermore, we conducted a survey of multiple physiological traits and genetic association analysis among 508 Tibetans living at high altitude (4,700m), and we found that the EPAS1 adaptive variants account for their relatively low hemoglobin levels as a protection from polycythemia, and these variants also contribute to the low pulmonary vasoconstriction response in Tibetans. Collectively, we demonstrate that the Tibetan-enriched EPAS1 variants down-regulate its expression, serving as the molecular basis of adaption to high altitude hypoxia in Tibetans.