Because of the need for cell-cell interaction, the possibility was considered that paracrine factors with sufficient diffusing capacity and instability in solution such as NO 37 might be involved. d7EB progenitor cells constitutively produced eNOS-derived NO in amounts comparable to those of immune cells, and strongly expressed eNOS. Co-culturing CD11bϩ cells with d7EB cells significantly reduced NO production in the culture supernatant after stimulation with LPS. This reduction in NO production was coupled with inhibition of iNOS expression in the co-cultured CD11bϩ cells and in CD11bϩ cells isolated from lungs of septic mice that received transplanted d7EB cells.