Hypoxia is associated with increased metastatic potential and poor prognosis in solid tumors. In this study, we demonstrated in the murine 5T33MM model that multiple myeloma (MM) cells localize in an extensively hypoxic niche compared with the naive bone marrow. Next, we investigated whether hypoxia could be used as a treatment target for MM by evaluating the effects of a new hypoxia-activated prodrug TH-302 in vitro and in vivo. In severely hypoxic conditions, TH-302 induces G₀/G₁ cell-cycle arrest by down-regulating cyclinD1/2/3, CDK4/6, p21^cip-1, p27^kip-1, and pRb expression, and triggers apoptosis in MM cells by up-regulating the cleaved proapoptotic caspase-3, -8, and -9 and poly ADP-ribose polymerase while having no significant effects under normoxic conditions. In vivo treatment of 5T33MM mice induces apoptosis of the MM cells within the bone marrow microenvironment and decreases paraprotein secretion. Our data support that hypoxia-activated treatment with TH-302 provides a potential new treatment option for MM.