Formation of cardiogenic pulmonary edema in acute left heart failure is traditionally attributed to increased fluid filtration from pulmonary capillaries and subsequent alveolar flooding. Here, we demonstrate that hydrostatic edema formation at moderately elevated vascular pressures is predominantly caused by an inhibition of alveolar fluid reabsorption, which is mediated by endothelial-derived nitric oxide (NO). In isolated rat lungs, we quantified fluid fluxes into and out of the alveolar space and endothelial NO production by a two-compartmental double-indicator dilution technique and in situ fluorescence imaging, respectively. Elevation of hydrostatic pressure induced Ca(2+)-dependent endothelial NO production and caused a net fluid shift into the alveolar space, which was predominantly attributable to impaired fluid reabsorption. Inhibition of NO production or soluble guanylate cyclase reconstituted alveolar fluid reabsorption, whereas fluid clearance was blocked by exogenous NO donors or cGMP analogs. In isolated mouse lungs, hydrostatic edema formation was attenuated by NO synthase inhibition. Similarly, edema formation was decreased in isolated mouse lungs of endothelial NO synthase-deficient mice. Chronic heart failure results in endothelial dysfunction and preservation of alveolar fluid reabsorption. These findings identify impaired alveolar fluid clearance as an important mechanism in the pathogenesis of hydrostatic lung edema. This effect is mediated by endothelial-derived NO acting as an intercompartmental signaling molecule at the alveolo-capillary barrier.