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Environmental nutrient levels impact cancer cell metabolism, resulting in context-dependent gene essentiality. Here, using loss-of-function screening based on RNA interference, we show that environmental oxygen levels are a major driver of differential essentiality between in vitro model systems and in vivo tumours. Above the 3-8% oxygen concentration typical of most tissues, we find that cancer cells depend on high levels of the iron-sulfur cluster biosynthetic enzyme NFS1. Mammary or subcutaneous tumours grow despite suppression of NFS1, whereas metastatic or primary lung tumours do not. Consistent with a role in surviving the high oxygen environment of incipient lung tumours, NFS1 lies in a region of genomic amplification present in lung adenocarcinoma and is most highly expressed in well-differentiated adenocarcinomas. NFS1 activity is particularly important for maintaining the iron-sulfur co-factors present in multiple cell-essential proteins upon exposure to oxygen compared to other forms of oxidative damage. Furthermore, insufficient iron-sulfur cluster maintenance robustly activates the iron-starvation response and, in combination with inhibition of glutathione biosynthesis, triggers ferroptosis, a non-apoptotic form of cell death. Suppression of NFS1 cooperates with inhibition of cysteine transport to trigger ferroptosis in vitro and slow tumour growth. Therefore, lung adenocarcinomas select for expression of a pathway that confers resistance to high oxygen tension and protects cells from undergoing ferroptosis in response to oxidative damage.