The experimental evidence is convincing that cytosolic guanylate cyclase is a hemoprotein containing stoichiometric amounts of heme, which functions as a prosthetic group for enzyme activation by NO. Nearly all of the studies described in this chapter were conducted before we began to appreciate in 1986 that mammalian vascular endothelial cells could synthesize their own NO. We know now that many different cell types synthesize NO, and that in most instances the NO interacts in a paracrine manner with adjacent target cells to activate cytosolic guanylate cyclase and elevate intracellular levels of cyclic GMP (Ignarro, 1990). The studies on endothelium-derived relaxing factor and authentic NO have shown clearly that heme and hemoproteins have a very high binding affinity for, and inhibit the actions of, these substances (Ignarro, 1989). The interaction between NO and the heme prosthetic group of guanylate cyclase appears to constitute an important signal transduction mechanism whereby NO raises intracellular cyclic GMP levels. This novel signal transduction mechanism is highly conducive to the efficient functioning of NO as a paracrine mediator of cellular function. As a small, lipophilic, and chemically labile molecule, NO diffuses out of its cells of origin and into nearby target cells. The very high binding affinity of enzyme-bound heme for NO ensures interaction of the two to cause guanylate cyclase activation and cyclic GMP formation. Thus, relatively uncomplicated mechanism can account for the paracrine function of endogenous NO in transcellular communication.