Arginase II activity contributes to reciprocal regulation of endothelial nitric oxide synthase (eNOS). We tested the hypotheses that arginase II activity participates in the regulation of Ca2+/Ca2+/calmodulin‐dependent kinase II/eNOS activation, and this process is dependent on mitochondrial p32. Methods and Results Downregulation of arginase II increased the concentration of cytosolic Ca2+ ([Ca2+]c) and decreased mitochondrial Ca2+ ([Ca2+]m) in microscopic and fluorescence‐activated cell sorting analyses, resulting in augmented eNOS Ser1177 phosphorylation and decreased eNOS Thr495 phosphorylation through Ca2+/Ca2+/calmodulin‐dependent kinase II. These changes were observed in human umbilical vein endothelial cells treated with small interfering RNA against p32 (sip32). Using matrix‐assisted laser desorption/ionization time‐of‐flight mass spectrometry, fluorescence immunoassay, and ion chromatography, inhibition of arginase II reduced the amount of spermine, a binding molecule, and the release of Ca2+ from p32. In addition, arginase II gene knockdown using small interfering RNA and knockout arginase II‐null mice resulted in reduced p32 protein level. In the aortas of wild‐type mice, small interfering RNA against p32 induced eNOS Ser1177 phosphorylation and enhanced NO‐dependent vasorelaxation. Arginase activity, p32 protein expression, spermine amount, and [Ca2+]m were increased in the aortas from apolipoprotein E (ApoE−/−) mice fed a high‐cholesterol diet, and intravenous administration of small interfering RNA against p32 restored Ca2+/Ca2+/calmodulin‐dependent kinase II‐dependent eNOS Ser1177 phosphorylation and improved endothelial dysfunction. The effects of arginase II downregulation were not associated with elevated NO production when tested in aortic endothelia from eNOS knockout mice. Conclusions These data demonstrate a novel function of arginase II in regulation of Ca2+‐dependent eNOS phosphorylation. This novel mechanism drives arginase activation, mitochondrial dysfunction, endothelial dysfunction, and atherogenesis.