Cancer-associated fibroblasts (CAFs) interact with tumour cells and promote growth and metastasis. Here, we show that CAF activation is reversible: chronic hypoxia deactivates CAFs, resulting in the loss of contractile force, reduced remodelling of the surrounding extracellular matrix and, ultimately, impaired CAF-mediated cancer cell invasion. Hypoxia inhibits prolyl hydroxylase domain protein 2 (PHD2), leading to hypoxia-inducible factor (HIF)-1α stabilisation, reduced expression of αSMA and periostin, and reduced myosin II activity. Loss of PHD2 in CAFs phenocopies the effects of hypoxia, which can be prevented by simultaneous depletion of HIF-1α. Treatment with the PHD inhibitor DMOG in an orthotopic breast cancer model significantly decreases spontaneous metastases to the lungs and liver, associated with decreased tumour stiffness and fibroblast activation. PHD2 depletion in CAFs co-injected with tumour cells similarly prevents CAF-induced metastasis to lungs and liver. Our data argue that reversion of CAFs towards a less active state is possible and could have important clinical implications.