PHD2 serves as an oxygen sensor that rescues blood supply by regulating vessel formation and shape in case of oxygen shortage(1-5). However, it is unknown whether PHD2 can influence arteriogenesis. Here we studied the role of PHD2 in collateral artery growth by using hindlimb ischaemia as a model, a process that compensates for the lack of blood flow in case of major arterial occlusion(6-8). We show that Phd2 (also known as Egln1) haplodeficient (Phd2(+/-)) mice displayed preformed collateral arteries that preserved limb perfusion and prevented tissue necrosis in ischaemia. Improved arteriogenesis in Phd2(+/-) mice was due to an expansion of tissue-resident, M2-like macrophages(9,10) and their increased release of arteriogenic factors, leading to enhanced smooth muscle cell (SMC) recruitment and growth. Both chronic and acute deletion of one Phd2 allele in macrophages was sufficient to skew their polarization towards a pro-arteriogenic phenotype. Mechanistically, collateral vessel preconditioning relied on the activation of canonical NF-kappa B pathway in Phd2(+/-) macrophages. These results unravel how PHD2 regulates arteriogenesis and artery homeostasis by controlling a specific differentiation state in macrophages and suggest new treatment options for ischaemic disorders.