C-type natriuretic peptide (CNP) is a recently described endothelium-derived relaxing factor. CNP relaxes vascular smooth muscle and inhibits smooth muscle proliferation by binding to natriuretic peptide receptor (NPR) type B (NPR-B) and producing cGMP. Lung parenchyma and fifth-generation pulmonary arteries (PA) and veins (PV) were isolated from late-gestation fetal lambs. All three types of NPR mRNA were detected in PA and PV by RT-PCR. CNP and NPR-B immunostaining was positive in pulmonary vascular endothelium and medial smooth muscle. CNP concentration-response curves of PA and PV were compared with those of atrial natriuretic peptide (ANP) by use of standard tissue bath techniques. CNP relaxed PV significantly better than PA. ANP relaxed PA and PV equally, but ANP relaxed PA significantly better than CNP. Pretreating PA and PV with natriuretic peptide receptor blocker (HS-142-1) or cGMP-dependent protein kinase inhibitor Rp-beta-phenyl-1- N2-etheno-8-bromoguanosine 3',5'-cyclic monophosphorothionate significantly inhibited the CNP relaxation response, indicating that the response was mediated through the NPR-cGMP pathway. We conclude that CNP is important in mediating pulmonary venous tone in the fetus.