Theoretical mass transfer rates and concentration distributions were determined for transient diffusion of free nitric oxide (NO) generated in vivo from vascular endothelial cells. Our analytical framework is typical of the bronchial circulation in the human pulmonary system but is applicable to the microvascular circulation in general. We characterized mass transfer rates in terms of the fractional mass flux across a boundary relative to the total endothelial NO production rate. NO concentration in the tissue surrounding blood vessels was expressed in terms of fractional soluble guanylate cyclase (sGC) activity. Our results suggest that endothelium-derived free NO is capable of vascular smooth muscle dilation despite its rapid consumption by hemoglobin in blood. An optimal blood vessel radius of 20 µm was estimated for NO signaling. We hypothesize intermittent generation of endothelial NO as a possible mechanism for sGC activation in vascular smooth muscle. This mechanism enhances the efficacy of NO-modulated vascular smooth muscle dilation while minimizing NO losses to blood and surrounding tissue.