In the lung, nitric oxide (NO) derives from several cellular sources, forming networks of paracrine communication. In pulmonary vessels, NO produced by endothelial cells is a powerful vasodilator. In the airways, NO originates from epithelial cells and from adventitial nerve endings to induce smooth muscle relaxation. Activated macrophages can also produce large quantities of NO during lung immunological reactions. In the normal pulmonary circulation, NO not only mediates vasodilation, but also opposes vasoconstriction, prevents platelet adhesion, controls growth of smooth muscle and influences the composition of the extracellular matrix. During exposure to chronic hypoxia, impaired endothelial NO production contributes to the increased vasomotor tone and vascular remodelling leading to sustained pulmonary hypertension. Exogenous NO gas delivered via the airspaces is a selective pulmonary vasodilator. Inhaled NO is now used as a therapy to treat various forms of pulmonary hypertension and to improve arterial oxygenation during lung injury.