Hormone, erythropoietin: Erythropoietin is a substance produced by the kidney that leads to the formation of red blood cells in the bone marrow. Abbreviated: EPO.The kidney cells that make EPO are specialized and are sensitive to low oxygen levels in the blood coming into the kidney.hese cells release erythropoietin when the oxygen level is low in the kidney. Erythropoietin stimulates the bone marrow to produce more red blood cells which in turn increases the oxygen-carrying capacity of the blood.