The heterodimeric transcription factor, hypoxia inducible factor-1 (HIF-1), is an important anticancer target as it supports the adaptation and response of tumors to hypoxia. Here, we optimized the repressed transactivator yeast two-hybrid system to further develop it as part of a versatile yeast-based drug discovery platform and validated it using HIF-1. We demonstrate both fluorescence-based and auxotrophy-based selections that could detect HIF-1α/HIF-1β dimerization inhibition. The engineered genetic selection is tunable and able to differentiate between strong and weak interactions, shows a large dynamic range, and is stable over different growth phases. Furthermore, we engineered mechanisms to control for cellular activity and off-target drug effects. We thoroughly characterized all parts of the biosensor system and argue this tool will be generally applicable to a wide array of protein-protein interaction targets. We anticipate this biosensor will be useful as part of a drug discovery platform, particularly when screening DNA-encoded new modality drugs.