Inducible nitric oxide synthase (NOS2) expression is increased in the airway epithelium in acute inflammatory disorders although the physiological impact remains unclear. We have previously shown that NOS2 inhibits NF-κB (p50-p65) activation in respiratory epithelial cells by inducing S-nitrosylation of the p65 monomer (SNO-p65). In addition, we have demonstrated that mouse lung SNO-p65 levels are acutely depleted in a lipopolysaccharide (LPS) model of lung injury and that augmenting SNO-p65 levels before LPS treatment results in decreased airway epithelial NF-κB activation, airway inflammation, and lung injury. We now show that aerosolized LPS induces NOS2 expression in the respiratory epithelium concomitant with an increase in lung SNO-p65 levels and a decrease in airway NF-κB activity. Genetic deletion of NOS2 results in an absence of SNO-p65 formation, persistent NF-κB activity in the respiratory epithelium, and prolonged airway inflammation. These results indicate that a primary function of LPS-induced NOS2 expression in the respiratory epithelium is to modulate the inflammatory response through deactivation of NF-κB via S-nitrosylation of p65, thereby counteracting the initial stimulus-coupled denitrosylation.