Carbon monoxide (CO) is a product of the enzyme heme oxygenase (HO; EC 1.14.99.3). In vascular smooth muscle cells, exogenously administered CO increases cyclic guanosine 3',5'-monophosphate (cGMP), which is an important regulator of vessel tone. We report here that smooth muscle cells produce CO via HO and that it regulates cGMP levels in these cells. Hypoxia, which has profound effects on vessel tone, significantly increased the transcriptional rate of the HO-1 gene resulting in corresponding increases of its mRNA and HO enzymatic activity. In addition, under the same conditions, rat aortic and pulmonary artery smooth muscle cells accumulated high levels of cGMP following a similar time course to that of HO-1 production. The increased accumulation of cGMP in smooth muscle cells required the enzymatic activity of HO, since it was abolished by a specific HO inhibitor, tin protoporphyrin. In contrast, N omega-nitro-L-arginine, a potent inhibitor of nitric oxide (NO) synthesis, had no effect on cGMP produced by smooth muscle cells, indicating that NO is not responsible for the activation of guanylyl cyclase in this setting. Furthermore, conditioned medium from hypoxic smooth muscle cells stimulated cGMP production in recipient cells and this stimulation was completely inhibited by tin protoporphyrin or hemoglobin, an inhibitor of CO production and a scavenger of CO, respectively. This report shows that HO-1 is expressed by vascular smooth muscle cells and that its product, CO, may regulate vascular tone under physiologic and pathophysiologic (such as hypoxic) conditions.