ATM-mediated signaling in response to DNA damage is a barrier to tumorigenesis. Here we asked whether replication stress could also contribute to ATM signaling. We demonstrate that, in the absence of DNA damage, ATM responds to replication stress in a hypoxia-induced heterochromatin-like context. In certain hypoxic conditions, replication stress occurs in the absence of detectable DNA damage. Hypoxia also induces H3K9me3, a histone modification associated with gene repression and heterochromatin. Hypoxia-induced replication stress together with increased H3K9me3 leads to ATM activation. Importantly, ATM prevents the accumulation of DNA damage in hypoxia. Most significantly, we describe a stress-specific role for ATM in maintaining DNA replication rates in a background of increased H3K9me3. Furthermore, the ATM-mediated response to oncogene-induced replication stress is enhanced in hypoxic conditions. Together, these data indicate that hypoxia plays a critical role in the activation of the DNA damage response, therefore contributing to this barrier to tumorigenesis.