Hypoxic pulmonary vasoconstriction (HPV) is a local reflex of the pulmonary circulation. The sensor is the smooth muscle of small pulmonary arterioles, and the signal it reads is the PO2 of the alveolar gas it serves, not the PO2 of the mixed-venous blood arriving in the vessel. When alveolar PO2 falls, that arteriole constricts; when alveolar PO2 rises, it dilates. The response is graded: a fall from a normal alveolar PO2 of about 100 mmHg toward 60 mmHg produces little change, but below roughly 60 mmHg the constriction becomes steep, and at an alveolar PO2 near 40 mmHg the vessel may carry only a fraction of its normoxic flow.
The consequence is a redistribution of pulmonary blood flow. Blood arriving at a poorly ventilated alveolus meets a high-resistance vessel, so the pressure gradient pushes it toward neighboring arterioles serving well-ventilated alveoli, where resistance is low. Because the poorly ventilated region now receives less perfusion, its local V/Q rises toward the normal range, and the fraction of cardiac output that behaves as shunt falls. This is why HPV is described as reducing shunt: it does not ventilate the unventilated alveolus, but it withdraws blood from it.
The diversion is not complete. The constriction is graded rather than all-or-none, so a hypoxic region still receives some flow, and the total shunt is reduced rather than abolished. The reflex also takes time: the constriction develops over seconds to minutes and, if the hypoxia persists, it can be reinforced by vascular remodeling over hours to days. A useful way to summarize the loop is that alveolar PO2 sets local vascular resistance, local resistance sets the distribution of perfusion, and the new distribution changes the local V/Q and therefore the local alveolar PO2 again.