Nitric oxide first captured the interest of biologists when this inorganic molecule was found to activate cytosolic guanylate cyclase and stimulate cyclic guanosine monophosphate (GMP) formation in mammalian cells. Further studies led to the finding that nitric oxide causes vascular smooth muscle relaxation and inhibition of platelet aggregation by mechanisms involving cyclic GMP and that several clinically used nitrovasodilators owe their biological actions to nitric oxide. Nitric oxide possesses physicochemical and pharmacological properties that make it an ideal candidate for a short-term regulator or modulator of vascular smooth muscle tone and platelet function. Nitric oxide is synthesized by various mammalian tissues including vascular endothelium, macrophages, neutrophils, hepatic Kupffer cells, adrenal tissue, cerebellum, and other tissues. Nitric oxide is synthesized from endogenous L-arginine by a nitric oxide synthase system that possesses different cofactor requirements in different cell types. The nitric oxide formed diffuses out of its cells of origin and into nearby target cells, where it binds to the heme group of cytosolic guanylate cyclase and thereby causes enzyme activation. This interaction represents a novel and widespread signal transduction mechanism that links extracellular stimuli to the biosynthesis of cyclic GMP in nearby target cells. The small molecular size and lipophilic nature of nitric oxide enable communication with nearby cells containing cytosolic guanylate cyclase. The extent of transcellular communication is limited by the short half-life of nitric oxide, thereby ensuring a localized response. Labile nitric oxide-generating molecules such as S-nitrosothiols may be involved as precursors or effectors. Further research will provide a deeper understanding of the biology of nitric oxide and the nature of associated pathophysiological states.