Endothelial cells in normal blood vessels might prevent the unscheduled proliferation of smooth muscle cells (SMCs) by the expression of cell migration and growth inhibitors. NO, a potent vasodilator, generated by endothelium-specific constitutive NO synthase (ecNOS) might be such an inhibitor. To test this hypothesis, we overexpressed human ecNOS in syngeneic rat arterial SMCs using retrovirus-mediated gene transfer. Compared with SMCs transduced with vector alone (LXSN SMCs), DNA synthesis and cell proliferation were inhibited in the ecNOS-expressing SMCs (LCNSN SMCs). Basal and stimulated (by the calcium ionophore A23187) secretion of NO and intracellular cGMP were increased in LCNSN SMCs. Nomega-Nitro-L-arginine (L-NA), an inhibitor of NO synthesis, enhanced the proliferation of LCNSN SMCs but had no effect on LXSN SMCs. LCNSN SMCs seeded onto the luminal surface of balloon-injured rat carotid arteries inhibited neointimal formation by 37% and induced marked dilatation (3-fold increase in vessel diameter) at 2 weeks compared with LXSN SMC-seeded arteries. Orally administered L-NA blocked these changes. Phosphorylation of vasodilator-stimulated phosphoprotein, which is regulated in part by NO, was elevated in LCNSN SMCs and in LCNSN SMC-seeded arteries. This study demonstrates that NO generation by ecNOS inhibits SMC proliferation in vitro and modulates vascular tone locally in vivo.