Excess vascular smooth muscle cell (VSMC) proliferation and contractility are key events in the pathophysiology of vascular disorders induced by hypoxia. We have recently reported that carbon monoxide (CO), produced by VSMC under conditions of hypoxia, can be a modulator of cGMP levels in both endothelial and smooth muscle cells. In this respect, some of the physiologic effects of CO in the vasculature parallel those of nitric oxide (NO), a well characterized regulator of vascular tone. We report here that under hypoxia, VSMC-derived CO is an important regulator of VSMC proliferation. Inhibiting CO formation or scavenging CO with hemoglobin increased VSMC proliferation in response to serum or to mitogens such as endothelin, whereas increasing CO production or exposing cells to exogenous CO lead to a markedly attenuated growth response. The effects of CO on VSMC proliferation correlated with changes in E2F-1 expression, the prototype member of a family of transcription factors that participate in the control of cell cycle progression. CO significantly suppressed E2F-1 expression, whereas, removal of CO from the cultures with hemoglobin lead to increased E2F-1 gene transcription, mRNA, and protein production as well as mRNA levels of c-myc, a target gene of E2F-1. Moreover, the actions of CO were mediated by the second messenger molecule, cGMP. Limiting VSMC growth by increasing the release of CO may represent a key event in the body's compensatory responses to hypoxia.