The cause of human cancers is imputed to the genetic alterations at nucleotide and chromosomal levels of ill-fated cells. It has long been recognized that genetic instability—the hallmark of human cancers—is responsible for the cellular changes that confer progressive transformation on cancerous cells. How cancer cells acquire genetic instability, however, is unclear. We propose that tumor development is a result of expansion and progression—two complementary aspects that collaborate with the tumor microenvironment—hypoxia in particular, on genetic alterations through the induction of genetic instability. In this article, we review the recent literature regarding how hypoxia functionally impairs various DNA repair pathways resulting in genetic instability and discuss the biomedical implications in cancer biology and treatment.