Although several reports have documented nitric oxide (NO) regulation of biofilm formation, the molecular basis of this phenomenon is unknown. In many bacteria, an H-NOX (heme-nitric oxide/oxygen-binding) gene is found near a diguanylate cyclase (DGC) gene. H-NOX domains are conserved hemoproteins that are known NO sensors. It is widely recognized that cyclic di-GMP (c-di-GMP) is a ubiquitous bacterial signaling molecule that regulates the transition between motility and biofilm. Therefore, NO may influence biofilm formation through H-NOX regulation of DGC, thus providing a molecular-level explanation for NO regulation of biofilm formation. This work demonstrates that, indeed, NO-bound H-NOX negatively affects biofilm formation by directly regulating c-di-GMP turnover in Shewanella woodyi strain MS32. Exposure of wild-type S. woodyi to a nanomolar level of NO resulted in the formation of thinner biofilms, and less intracellular c-di-GMP, than in the absence of NO. Also, a mutant strain in the gene encoding SwH-NOX showed a decreased level of biofilm formation (and a decreased amount of intracellular c-di-GMP) with no change observed upon NO addition. Furthermore, using purified proteins, it was demonstrated that SwH-NOX and SwDGC are binding partners. SwDGC is a dual-functioning DGC; it has diguanylate cyclase and phosphodiesterase activities. These data indicate that NO-bound SwH-NOX enhances c-di-GMP degradation, but not synthesis, by SwDGC. These results support the biofilm growth data and indicate that S. woodyi senses nanomolar NO with an H-NOX domain and that SwH-NOX regulates SwDGC activity, resulting in a reduction in c-di-GMP concentration and a decreased level of biofilm growth in the presence of NO. These data provide a detailed molecular mechanism for NO regulation of c-di-GMP signaling and biofilm formation.