Signal transduction in the NF-kappaB transcription factor pathway is inhibited by inducible nitric oxide synthase (NOS2) activity, although the molecular mechanism(s) are incompletely understood. We have previously shown that nitric oxide (NO), derived from NOS2 consequent upon cytokine stimulation, attenuates NF-kappaB p50-p65 heterodimer DNA binding and have identified the p50 monomer as a locus for inhibitory S-nitrosylation. We now show that the binding partner of p50, NF-kappaB p65, is also targeted by NO following cytokine stimulation of respiratory epithelial cells and macrophages and identify a conserved cysteine within the Rel homology domain that is the site for S-nitrosylation. S-Nitrosylation of p65 inhibits NF-kappaB-dependent gene transcription, and nuclear levels of S-nitrosylated p65 correlate with decreased DNA binding of the p50-p65 heterodimer. NOS2 regulates cytokine-induced S-nitrosylation of p65, resulting in decreased NF-kappaB binding to the NOS2 promoter, thereby inhibiting further NOS2 expression. Collectively, these findings delineate a mechanism by which NOS2 modulates NF-kappaB activity and regulates gene expression in inflammation.