Nitric oxide (NO) signaling controls various metabolic pathways in bacteria and higher eukaryotes. Cellular enzymes synthesize and detoxify NO; however, a mechanism that controls its cellular homeostasis has not been identified. Here, we found a nitrogen oxide cycle involving nitrate reductase (Nar) and the NO dioxygenase flavohemoglobin (Fhb), that facilitate inter-conversion of nitrate, nitrite, and NO in the actinobacterium Streptomyces coelicolor. This cycle regulates cellular NO levels, bacterial antibiotic production, and morphological differentiation. NO down-regulates Nar and up-regulates Fhb gene expression via the NO-dependent transcriptional factors DevSR and NsrR, respectively, which are involved in the auto-regulation mechanism of intracellular NO levels. Nitrite generated by the NO cycles induces gene expression in neighboring cells, indicating an additional role of the cycle as a producer of a transmittable inter-cellular communication molecule.