Inducible NO synthase (iNOS) in human T cells is implicated in the pathogenesis of graft arteriosclerosis. Here we analyze the regulation and role of iNOS in human peripheral blood T cells. Allogeneic endothelial cells (EC) or dermal fibroblasts induce iNOS mRNA and protein expression, as well as enzymatic activity in primary human CD8 T cells. Although human EC activate T cells through the presentation of alloantigen, iNOS induction is confined to nonactivated T cells and does not depend on MHC molecules or costimulators. iNOS induction does involve new transcription and depends on NF-kappaB. JAK signaling, initiated during T cell activation, inhibits iNOS expression. Even though iNOS is confined to bystander T cells, inhibition of iNOS activity reduces T cell proliferation in response to allogeneic EC, and addition of low levels of a NO donor rescues T cell responses. Similarly, iNOS is preferentially expressed by nonproliferating T cells within allografted arteries in vivo, and inhibition of iNOS activity reduces the number of activated T cells in these artery segments. These data identify a previously undescribed mechanism for enhanced activation of alloreactive T cells, namely stromal cell-mediated induction of iNOS in bystander T cells.