EPO stands for eythropoietin.

This is a natural endocrine hormone, and is great for treating anaemia caused by renal failure. Completely unacceptable that some people have used it to cheat in endurance sports. Erythropoietin stimulates the process of erythropoiesis, which is the formation of erythrocytes in the red bone marrow.
The kidneys are able to detect the amount of oxygen in the blood which is perfusing them. If levels of oxygen drop, the kidneys respond by releasing erythropoietin. (The liver also produces small amounts of erythropoietin). Erythropoietin stimulates the process of erythropoiesis, which is the production of new erythrocytes (i.e. red blood cells). This cell forming process takes place in the red bone marrow and once formed the cells are released into the systemic circulation. If the number of red cells in the blood is increased this will increase the oxygen carrying capacity of the blood. This in turn will result in increased levels of oxygen in the blood perfusing the kidneys. When the levels of oxygen in the renal blood supply are increased this will again be detected and the kidney will respond by secreting less erythropoietin.
This regulation of the secretion of erythropoietin is therefore one of the mechanisms which controls the numbers of red cells and therefore influences the oxygen carrying capacity of the blood. In health EPO physiology is the main mechanism ensuring that the rate of new red blood cell production balances the rate at which old cells are destroyed. However, there can be alterations to this balance. For example if a person goes to live at altitude there will be a lower partial pressure of oxygen in the air and so the volumes of oxygen in the blood will drop. This will stimulate erythropoietin release and increase the proportion of red cells in the blood to increase oxygen carrying capacity. As red cells take time to manufacture the consequent adaptation to altitude takes time.
Regular aerobic activity will also stimulate erythropoietin release and so increase red cell production. In some cases of renal failure the kidneys are no longer able to produce erythropoietin resulting in anaemia. Such patients may therefore be treated by giving recombinant EPO injections. EPO has also been used by cheating endurance athletes to increase their aerobic capacity. The danger of injecting synthesised EPO, or living at high altitude, is that the increased numbers of red cells causes blood viscosity to increase. This in turn increases the probability of thrombus formation (a thrombus is a clot in a blood vessel and can result in death).