Carbon monoxide (CO) can arrest cellular respiration, but paradoxically, it is synthesized endogenously by heme oxygenase type 1 (Ho-1) in response to ischemic stress. Ho-1-deficient (Hmox1-/-) mice exhibited lethal ischemic lung injury, but were rescued from death by inhaled CO. CO drove ischemic protection by activating soluble guanylate cyclase and thereby suppressed hypoxic induction of the gene encoding plasminogen activator inhibitor-1 (PAI-1) in mononuclear phagocytes, which reduced accrual of microvascular fibrin. CO-mediated ischemic protection observed in wild-type mice was lost in mice null for the gene encoding PAI-1 (Serpine1). These data establish a fundamental link between CO and prevention of ischemic injury based on the ability of CO to derepress the fibrinolytic axis. These data also point to a potential therapeutic use for inhaled CO.