The purpose of this study was to determine the mechanism by which hydrogen peroxide (H2O2), an important inflammatory mediator, relaxes canine tracheal smooth muscle (CTSM). H2O2 caused concentration-dependent relaxations of CTSM strips contracted with ACh or isotonic KCl [EC50 of 0.24 ± 0.04 (SE) and 0.23 ± 0.04 mM, respectively]. Indomethacin (10 μM) decreased the sensitivity of both KCl- and ACh-contracted strips to H2O2. H2O2 increased intracellular cAMP levels, an increase that was abolished by indomethacin. H2O2 did not affect intracellular cGMP levels. In strips treated with indomethacin and contracted with ACh or isotonic KCl, H2O2- evoked relaxations were accompanied by increases in intracellular Ca2+ concentration and decreases in regulatory myosin light chain phosphorylation. We conclude that H2O2 decreases Ca2+ sensitivity in CTSM by decreasing regulatory myosin light chain phosphorylation through inhibition of myosin light chain kinase and/or activation of smooth muscle protein phosphatases.