<p>Disease progression in multiple sclerosis (MS) remains a major unmet clinical challenge, as it is driven by pathogenic mechanisms that are poorly targeted by currently available disease-modifying treatments. Whereas acute focal inflammation characterizes the relapsing–remitting phase, converging neuropathological, imaging and experimental evidence identifies a chronic low-grade compartmentalized inflammatory process, the so-called “smoldering” inflammation, as a central driver of disease progression in MS. Recent findings suggest that both tissue hypoxia (primarily resulting from vascular dysfunction) and virtual hypoxia (a state of metabolic supply–demand mismatch culminating in bioenergetic failure) may critically contribute to the onset, persistence and compartmentalization of smoldering inflammation. In this review, we first delineate the pathological mechanisms underlying smoldering inflammation, distinguishing between lesional and extra-lesional features. We then examine the processes leading to tissue and virtual hypoxia in MS. As a key link between smoldering inflammation and hypoxia, we focused on the Hypoxia-Inducible Factor (HIF) signaling, the master regulator of cellular responses to hypoxia. Particularly, we reviewed recent evidence supporting its role as a central immunometabolic hub shaping immune and glial cell function within the hypoxic microenvironment of smoldering inflammation in MS. Finally, we critically evaluate the potential of the HIF signaling as a therapeutic target to hamper smoldering inflammation and disease progression in MS.</p>