While inward remodeling of small arteries in response to low blood flow, hypertension, and chronic vasoconstriction depends on type 2 transglutaminase (TG2), the mechanisms of action have remained unresolved. We studied the regulation of TG2 activity, its (sub) cellular localization, substrates, and its specific mode of action during small artery inward remodeling. We found that inward remodeling of isolated mouse mesenteric arteries by exogenous TG2 required the presence of a reducing agent. The effect of TG2 depended on its cross-linking activity, as indicated by the lack of effect of mutant TG2. The cell-permeable reducing agent DTT, but not the cell-impermeable reducing agent TCEP, induced translocation of endogenous TG2 and high membrane-bound transglutaminase activity. This coincided with inward remodeling, characterized by a stiffening of the artery. The remodeling could be inhibited by a TG2 inhibitor and by the nitric oxide donor, SNAP. Using a pull-down assay and mass spectrometry, 21 proteins were identified as TG2 cross-linking substrates, including fibronectin, collagen and nidogen. Inward remodeling induced by low blood flow was associated with the upregulation of several anti-oxidant proteins, notably glutathione-S-transferase, and selenoprotein P. In conclusion, these results show that a reduced state induces smooth muscle membrane-bound TG2 activity. Inward remodeling results from the cross-linking of vicinal matrix proteins, causing a stiffening of the arterial wall.