The authors previously demonstrated that arginine vasopressin (AVP) lowers pulmonary artery pressure in rats with hypoxic pulmonary hypertension by activation of the V1 receptor. The pulmonary depressor effect of AVP in hypoxia-adapted rats is not due to its effect on cardiac output. The current study tested two alternative hypotheses: that AVP lowers pulmonary artery pressure in the hypoxia-adapted lung by (1) dilating pulmonary vasculature directly, or (2) releasing atrial natriuretic peptide (ANP) from the heart. The first hypothesis was tested by injecting AVP into the pulmonary arteries of isolated, buffer perfused lungs and monitoring pulmonary artery pressure, and by exposing preconstricted pulmonary artery rings to graded doses of AVP and monitoring the tension generated. AVP caused minimal vasodilation in perfused lungs and only a small vasodilator effect in pulmonary artery rings. The second hypothesis was tested by injecting AVP (160 ng/kg) or vehicle intravenously in conscious hypoxia-adapted (4 weeks) or air control rats and measuring ANP in arterial blood and atria, and by testing pretreatment with the V1 receptor antagonist d(CH2)5 Tyr(Me)AVP (130 μg/kg) on the AVP-induced increase in plasma ANP. AVP produced a 7-fold increase in plasma ANP (209 ± 33 to 1346 ± 233 pg/ml; p < 0.05) in hypoxia-adapted rats and a 5-fold increase in ANP (122 ± 22 to 573 ± 174 pg/ml; p < 0.05) in air controls. ANP release was abolished by pretreatment of both groups with d(CH2)5 Tyr(Me)AVP. The AVP-induced ANP release came mainly from left atrium. These data strongly suggest that the pulmonary depressor effects of AVP in hypoxia-adapted rats is due to augmented V1 receptor-induced release of ANP from left atrium.