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C O is produced in vascular smooth muscle cells (VSMC) by heme oxygenase-1 (HO-1). CO increases cGMP levels in VSMC; however, its possible additional roles in the vasculature have not been examined. We report that a product of HO, released from VSMC and inhibited by hemoglobin, has paracrine effects on endothelial cells: it increases endothelial cGMP content and decreases the expression of the mitogens, endothelin-1 (ET-1) and platelet-derived growth factor-B (PDGF-B). This product has the characteristics of CO, and its production is increased sevenfold under hypoxia. The VSMC-derived CO caused a fourfold rise in endothelial cell cGMP. In addition, it inhibited the hypoxia-induced increases in mRNA levels of the ET-1 and PDGF-B genes. Inhibitors of HO, and hemoglobin, a scavenger of CO, prevented the rise in cGMP and also restored the hypoxic response of these genes. The inhibition of ET-1 and PDGF-B mRNA by CO resulted in decreased production of these endothelial-derived mitogens, and in turn, inhibition of VSMC proliferation. These findings suggest an important physiologic role for VSMC-derived CO in modulating cell-cell interaction and cell proliferation in the vessel wall during hypoxia.