The molecular mechanism of desensitization of soluble guanylyl cyclase (sGC), the NO receptor, has long remained unresolved. Posttranslational modification and redox state have been postulated to affect sGC sensitivity to NO but evidence has been lacking. We now show that sGC can be S-nitrosylated in primary aortic smooth muscle cells by S-nitrosocysteine (CSNO), an S-nitrosylating agent, in human umbilical vein endothelial cells after vascular endothelial growth factor treatment and in isolated aorta after sustained exposure to acetylcholine. Importantly, we show that S-nitrosylation of sGC results in decreased responsiveness to NO characterized by loss of NO-stimulated sGC activity. Desensitization of sGC is concentration- and time-dependent on exposure to CSNO, and sensitivity of sGC to NO can be restored and its S-nitrosylation prevented with cellular increase of thiols. We confirm in vitro with semipurified sGC that S-nitrosylation directly causes desensitization, suggesting that other cellular factors are not required. Two potential S-nitrosylated cysteines in the alpha- and beta-subunits of sGC were identified by MS. Replacement of these cysteines, C243 in alpha and C122 in beta, created mutants that were mostly resistant to desensitization. Structural analysis of the region near beta-C122 in the homologous Nostoc H-NOX crystal structure indicates that this residue is in the vicinity of the heme and its S-nitrosylation could dampen NO activation by affecting the positions of key residues interacting with the heme. This study suggests that S-nitrosylation of sGC is a means by which memory of NO exposure is kept in smooth muscle cells and could be a mechanism of NO tolerance.