Obliterative bronchiolitis (OB) develops insidiously in nearly half of all lung transplant recipients. Although typically preceded by a CD8⁺ T cell–rich lymphocytic bronchitis, it remains unresponsive to conventional immunosuppression. Using an airflow permissive model to study the role of gases flowing over the transplanted airway, it is shown that prolonged inhalation of sublethal doses of carbon monoxide (CO), but not nitric oxide (NO), obliterate the appearance of the obstructive airway lesion. Induction of the enzyme responsible for the synthesis of CO, heme oxygenase (Hmox) 1, increased carboxyhemoglobin levels and suppressed lymphocytic bronchitis and airway luminal occlusion after transplantation. In contrast, zinc protoporphyrin IX, a competitive inhibitor of Hmox, increased airway luminal occlusion. Compared with wild-type allografts, expression of inducible NO synthase (iNOS), which promotes the influx of cytoeffector leukocytes and airway graft rejection, was strikingly reduced by either enhanced expression of Hmox-1 or exogenous CO. Hmox-1/CO decreased nuclear factor (NF)-κB binding activity to the iNOS promoter region and iNOS expression. Inhibition of soluble guanylate cyclase did not interfere with the ability of CO to suppress OB, implicating a cyclic guanosine 3′,5′-monophosphate–independent mechanism through which CO suppresses NF-κB, iNOS transcription, and OB. Prolonged CO inhalation represents a new immunosuppresive strategy to prevent OB.