Emerging evidence supports the idea that arginase, expressed in the vascular endothelial cells of humans and other species, modulates endothelial nitric oxide (NO) synthase-3 (NOS-3) activity by regulating intracellular L-arginine bioavailability. Arginase II is thought to be expressed in the mitochondria of a variety of nonendothelial cells, whereas arginase I is known to be confined to the cytosol of hepatic and other cells. The isoforms that regulate NOS-3 and their subcellular distribution, however, remain incompletely characterized. We therefore tested the hypothesis that arginase II is confined to the mitochondria and that mitochondrial arginase II reciprocally regulates vascular endothelial NO production. Western blot analysis, immunocytochemistry with MitoTracker, and immunoelectron microscopy confirmed that arginase II is confined predominantly but not exclusively to the mitochondria. Arginase activity was significantly decreased, whereas NO production was significantly increased in the aorta and isolated endothelial cells from arginase II knockout (ArgII(-/-)) mice compared with wild-type (WT) mice. The vasorelaxation response to acetylcholine (ACh) was markedly enhanced and the vasoconstrictor response to phenylephrine (PE) attenuated in ArgII(-/-) in pressurized mouse carotid arteries. Furthermore, inhibition of NOS-3 by N(G)-nitro-L-arginine methyl ester (L-NAME) impaired ACh response and restored the PE response to that observed in WT vessels. Vascular stiffness, as assessed by pulse wave velocity (PWV), was significantly decreased in ArgII(-/-) compared with WT mice. On the other hand, 14 days of oral L-NAME treatment significantly increased PWV in both WT and ArgII(-/-) mice, such that they were not significantly different from one another. These data suggest that arginase II is predominantly confined to the mitochondria and that this mitochondrial arginase II regulates NO production, vascular endothelial function, and vascular stiffness by modulating NOS-3 activity.