Recent studies reveal a novel role for hemoglobin as an allosterically regulated nitrite reductase that may mediate nitric oxide (NO)-dependent signaling along the physiological oxygen gradient. Nitrite reacts with deoxyhemoglobin in an allosteric reaction that generates NO and oxidizes deoxyhemoglobin to methemoglobin. NO then reacts at a nearly diffusion-limited rate with deoxyhemoglobin to form iron-nitrosyl-hemoglobin, which to date has been considered a highly stable adduct and, thus, not a source of bioavailable NO. However, under physiological conditions of partial oxygen saturation, nitrite will also react with oxyhemoglobin, and although this complex autocatalytic reaction has been studied for a century, the interaction of the oxy- and deoxy-reactions and the effects on NO disposition have never been explored. We have now characterized the kinetics of hemoglobin oxidation and NO generation at a range of oxygen partial pressures and found that the deoxy-reaction runs in parallel with and partially inhibits the oxy-reaction. In fact, intermediates in the oxy-reaction oxidize the heme iron of iron-nitrosyl-hemoglobin, a product of the deoxy-reaction, which releases NO from the iron-nitrosyl. This oxidative denitrosylation is particularly striking during cycles of hemoglobin deoxygenation and oxygenation in the presence of nitrite. These chemistries may contribute to the oxygen-dependent disposition of nitrite in red cells by limiting oxidative inactivation of nitrite by oxyhemoglobin, promoting nitrite reduction to NO by deoxyhemoglobin, and releasing free NO from iron-nitrosyl-hemoglobin.