Inhaled nitric oxide (NO) is a selective pulmonary vasodilator with beneficial effects on some lung diseases, yet conflicting results, particularly in chronic obstructive pulmonary disease, have been reported. We hypothesized that although inhaled NO would improve gas exchange in the presence of shunt (by increasing blood flow to normal areas), it could worsen gas exchange when areas of low ventilation-perfusion ((V) over dot A/(Q) over dot) ratio were present since these areas could be preferentially vasodilated by NO. We examined how similar to 80 ppm inhaled NO altered pulmonary gas exchange in anesthetized ventilated dogs with the following: (1) normal lungs (n = 8), (2) shunt (n = 9, 24.7% shunt) produced by complete obstruction of one lobar bronchus, and (3) (V) over dot A/(Q) over dot inequality (n = 8) created by partial obstruction of one lobar bronchus resulting in a bimodal (V) over dot A/(Q) over dot distribution with 13% perfusion of low (V) over dot A/(Q) over dot areas (0.005 < (V) over to A/(Q) over dot < 0.1) without shunt. Inhaled No significantly reduced pulmonary arterial (p < 0.001) and wedge pressures (p < 0.01) and pulmonary vascular resistance (p < 0.01) without changing cardiac output in each group. In normal lungs, NO did not alter Pa-O2 or (V) over dot A/(Q) over dot inequality. However, with complete obstruction, shunt fell slightly (p < 0.001) with NO. In lungs with (V) over dot A(Q) over dot inequality, NO variably affected (V) over dot A/(Q) over dot matching, which was improved in some dogs and worsened in others. In these lungs, changes in pulmonary vascular resistance of the abnormal area of the lung were negatively correlated with changes in (V) over dot A/(Q) over dot dispersion (logSD(Q) over dot) (R = -0.85, p < 0.01) and positively correlated with Pa-O2 (R = 0.79, p < 0.05). We conclude that NO has net effects on pulmonary gas exchange, depending on the underlying lung pathology consistent with competing vasodilatory effects on the normal and abnormal areas that receive the gas.