The role of Hemoglobin (Hb) on nitric oxide (NO) biology has received much attention. Until recently, the reaction between erythrocytic Hb and NO was generally considered in the context of mechanisms that safely detoxify NO. However, recent insights suggest that properties associated with the red blood cell limit NO-Hb interactions under physiological conditions, and provide some resolution to the question of how NO functions in the presence of blood. Furthermore, Hb-dependent mechanisms that preserve, not destroy NO bioactivity in vivo have also been proposed. The emerging picture suggests that the interplay between NO and erythrocytic Hb is important in regulating the functions of both these molecules in vivo. However, Hb-dependent scavenging and loss of NO function is significant when this heme protein is present outside the red blood cell. This can occur during hemolysis or administration of Hb-based blood substitutes. Scavenging of NO is a significant problem that limits the use of Hb-based blood substitutes in the clinic, and development of Hb molecules that do not efficiently react with NO remains an important area of investigation. In this article, the reactions between NO and erythrocytic Hb or cell-free Hb are described and the effects on NO and Hb function in vivo and development of blood substitutes discussed.