The endothelium modulates vascular tone by liberating both dilator [endothelium-derived relaxing factors; EDRFs]and constrictor substances [endothelium-derived contracting factors; EDCFs]. This review focused on endothelium-derived relaxing factor, its discovery, characteristics, synthesis and interaction with vascular smooth muscle. The major endothelium-derived relaxing factor is nitric oxide formed from L-arginine, which activates guanylate cyclase in the smooth muscle, leading to accumulation of cyclic-GMP. Endothelial cells can also release endothelium-derived hyperpolarizing factor EDHF which also cause endothelium-dependent relaxation.