Sepsis is an acute inflammatory disease characterized by dysfunctional blood flow and hypotension. Nitric oxide (NO) is elevated during sepsis and plays an integral role in the associated vascular pathology. However, precise mechanisms and functions of NO in sepsis remain unclear. In this study, we show that red blood cells (RBCs) are foci for nitrosative reactions during acute inflammation, resulting in the formation of cells that can promote systemic vascular relaxation in an uncontrolled manner. Specifically, using experimental models of endotoxemia and surgical sepsis, NO adducts were found in the RBCs, including S-nitrosohemoglobin (SNOHb). These RBCs, referred to as septic RBCs, spontaneously stimulated vasodilation in a manner consistent with elevated SNOHb concentrations. Moreover, relaxation was cyclic guanosine monophosphate (cGMP) dependent and was inhibited by RBC lysis and glutathione but not by the NO scavenger 2-(4-carboxyphenyl)-4,4,5,5 tetramethylimidazoline 1-oxyl 3-oxide (C-PTIO). The potential mechanism of septic RBC-mediated vasorelaxation is discussed and may involve the intermediate, nitroxyl (HNO). Coupled with data showing that NO adducts in septic RBCs were dependent on the inducible nitric oxide synthase and correlated with plasma nitrite, these findings provide a novel framework to understand mechanisms underlying dysfunctional blood flow responses during sepsis. Specifically, the concept that RBCs directly mediate systemic hypotension through NO-dependent mechanisms is discussed.