Nitric oxide (NO) produced by the endothelium diffuses both into the lumen and to the smooth muscle cells according to the concentration gradient in each direction. The extremely high reaction rate between NO and hemoglobin (Hb), k_Hb= 3–5 × 10⁷ M⁻¹⋅s⁻¹, suggests that most of the NO produced would be consumed by Hb in the red blood cells (RBCs), which then would block the biological effect of NO. Therefore, specific mechanisms must exist under physiological conditions to reduce the NO consumption by RBCs, in which the Hb concentration is very high (24 mM heme). By using isolated microvessels as a bioassay, here we show that physiological concentrations of RBCs in the presence of intravascular flow does not inhibit NO-mediated vessel dilation, suggesting that RBCs under this condition are not an NO scavenger. On the other hand, RBCs (50% hematocrit) without intravascular flow reduce NO-mediated dilation to serotonin by 30%. In contrast, free Hb (10 μM) completely inhibits NO-mediated dilation with or without intravascular flow. The effect of flow on NO consumption by RBCs may be attributed to the formation of an RBC-free zone near the vessel wall, which is caused by hydrodynamic forces on particles. Intravascular flow does not affect the reaction rate between NO and free Hb in the lumen, because the latter forms a homogeneous solution and is not subject to the hydrodynamic separation. However, intravascular flow only partially contributes to the reduced consumption of NO by RBCs, because without the flow, the NO consumption by RBCs is already about 3 orders of magnitude slower than free Hb.