In rats, chronic hypercapnia has been reported to ameliorate hypoxia-induced pulmonary hypertension in newborn and adult and to enhance endothelium-dependent vasorelaxation in adult pulmonary arteries. The underlying mechanisms accounting for chronic hypercapnia-induced improvements in pulmonary vascular function are not understood. Hypothesizing that downregulation of arginase activity may be contributory, we examined relaxation responses and arginase activity and expression in pulmonary arteries from newborn rats that were exposed (from birth to 14 days) to either mild-to-moderate (5.5% inhaled CO(2)) or severe (10% CO(2)) hypercapnia with either normoxia or hypoxia (13% O(2)). Pulmonary arteries from pups exposed to normoxia and chronic hypercapnia (5.5 or 10% CO(2)) contracted less in response to a thromboxane A(2) analog, U-46619, and showed enhanced endothelium-dependent (but not independent) relaxation compared with arteries from normocapnic pups (P < 0.01). Parallel with these changes, arginase activity and arginase I (but not II) expression in lung and pulmonary arterial tissue were significantly decreased (P < 0.05). Exposure to 10% CO(2) significantly increased (P < 0.01) pulmonary arterial tissue nitric oxide (nitrite) generation. In pups chronically exposed to hypoxia (13% O(2)), severe hypercapnia (10% CO(2)) significantly (P < 0.05) enhanced endothelium-dependent relaxation, increased nitric oxide generation, and decreased arginase activity but not expression. We conclude that chronic hypercapnia-induced downregulation of lung arginase expression and/or activity may reduce pulmonary vascular resistance by enhancing nitric oxide generation and thus endothelium-dependent relaxation. This mechanism may explain some of the beneficial effects of chronic hypercapnia on experimental pulmonary hypertension.