Heme oxygenase-1 (HO-1), an inducible stress protein, confers cytoprotection against oxidative stress in vitro and in vivo. In addition to its physiological role in heme degradation, HO-1 may influence a number of cellular processes, including growth, inflammation, and apoptosis. By virtue of anti-inflammatory effects, HO-1 limits tissue damage in response to proinflammatory stimuli and prevents allograft rejection after transplantation. The transcriptional upregulation of HO-1 responds to many agents, such as hypoxia, bacterial lipopolysaccharide, and reactive oxygen/nitrogen species. HO-1 and its constitutively expressed isozyme, heme oxygenase-2, catalyze the rate-limiting step in the conversion of heme to its metabolites, bilirubin IXalpha, ferrous iron, and carbon monoxide (CO). The mechanisms by which HO-1 provides protection most likely involve its enzymatic reaction products. Remarkably, administration of CO at low concentrations can substitute for HO-1 with respect to anti-inflammatory and anti-apoptotic effects, suggesting a role for CO as a key mediator of HO-1 function. Chronic, low-level, exogenous exposure to CO from cigarette smoking contributes to the importance of CO in pulmonary medicine. The implications of the HO-1/CO system in pulmonary diseases will be discussed in this review, with an emphasis on inflammatory states.