Nitric oxide (NO) triggers various physiological responses in numerous tissues by binding and activating soluble guanylate cyclase (sGC) to produce the second messenger cGMP. In vivo, basal NO/cGMP signaling maintains a resting state in target cells (for example, resting tone in smooth muscle), but an acute burst of NO/cGMP signaling triggers rapid responses (such as smooth muscle relaxation). Recent studies have shown that the sGC heterodimer comprises at least four modular domains per subunit. The N-terminal heme domain is a member of the H-NOX family of domains that bind O(2) and/or NO and are conserved in prokaryotes and higher eukaryotes. Studies of these domains have uncovered the molecular basis for ligand discrimination by sGC. Other work has identified two temporally distinct states of sGC activation by NO: formation of a stable NO-heme complex results in a low-activity species, and additional NO produces a transient fully active enzyme. Nucleotides also allosterically modulate the duration and intensity of enzyme activity. Together, these studies suggest a biochemical basis for the two distinct types of NO/cGMP signal observed in vivo.