We demonstrate herein dramatic acceleration of aqueous nitric oxide (NO) reaction with O₂ within the hydrophobic region of either phospholipid or biological membranes or detergent micelles and demonstrate that the presence of a distinct hydrophobic phase is required. Per unit volume, at low amounts of hydrophobic phase, the reaction of NO with O₂ within the membranes is approximately 300 times more rapid than in the surrounding aqueous medium. In tissue, even though the membrane represents only 3% of the total volume, we calculate that 90% of NO reaction with O₂ will occur there. We conclude that biological membranes and other tissue hydrophobic compartments are important sites for disappearance of NO and for formation of NO-derived reactive species and that attenuation of these potentially damaging reactions is an important protective action of lipid-soluble antioxidants such as vitamin E.