Nitric oxide (NO) biology has focused on the tightly regulated enzymatic mechanism that transforms L-arginine into a family of molecules, which serve both signaling and defense functions. However, very little is known of the pathways that metabolize these molecules or turn off the signals. The paradigm is well exemplified in bacteria where S-nitrosothiols (SNO)-compounds identified with antimicrobial activities of NO synthase-elicit responses that mediate bacterial resistance by unknown mechanisms. Here we show that Escherichia coli possess both constitutive and inducible elements for SNO metabolism. Constitutive enzyme(s) cleave SNO to NO whereas bacterial hemoglobin, a widely distributed flavohemoglobin of poorly understood function, is central to the inducible response. Remarkably, the protein has evolved a novel heme-detoxification mechanism for NO. Specifically, the heme serves a dioxygenase function that produces mainly nitrate. These studies thus provide new insights into SNO and NO metabolism and identify enzymes with reactions that were thought to occur only by chemical means. Our results also emphasize that the reactions of SNO and NO with hemoglobins are evolutionary conserved, but have been adapted for cell-specific function.