Secondary polycythemia, a disease characterized by a selective increase in circulating mature erythrocytes, is caused by enhanced erythropoietin (Epo) concentrations triggered by hypoxia-inducible factor-2α (HIF-2α). While mechanisms of hypoxia-dependent stabilization of HIF-2α protein are well established, data regarding oxygen-independent regulation of HIF-2α are sparse. In this study, we generated a novel transgenic mouse model, in which biglycan was constitutively overexpressed and secreted by hepatocytes (BGN (Tg)), thereby providing a constant source of biglycan released into the blood stream. We discovered that although the mice were apparently normal, they harbored an increase in mature circulating erythrocytes. In addition to erythrocytosis, the BGN (Tg) mice showed elevated hemoglobin concentrations, hematocrit values and enhanced total iron binding capacity, revealing a clinical picture of polycythemia. In BGN (Tg) mice markedly enhanced Epo mRNA expression was observed in the liver and kidney, while elevated Epo protein levels were found in liver, kidney and blood. Mechanistically, we showed that the transgenic animals had an abundance of HIF-2α protein in the liver and kidney. Finally, by transiently overexpressing circulating biglycan in mice deficient in various Toll-like receptors (TLRs), we determined that this novel function of biglycan to promote Epo synthesis was specifically mediated by a selective interaction with TLR2. Thus, we discovered a novel biological pathway of soluble biglycan inducing HIF-2α protein stabilization and Epo production presumably in an oxygen-independent manner, ultimately giving rise to secondary polycythemia.