Nitric oxide (NO), a reactive diatomic gas and a potent signaling molecule, is required for proper cardiovascular functioning. Soluble guanylate cyclase (sGC), a heterodimeric heme protein, is the key intracellular NO receptor protein which, upon NO binding, undergoes conformational changes leading to catalysis and the cGMP signaling cascade. Several small molecules that allosterically stimulate sGC have been developed for treatment of pulmonary hypertension, but little is known about their binding site or how they stimulate activity. This dissertation describes experiments designed to uncover the molecular basis for signal transduction in sGC by NO and small molecule stimulators. The crystal structure of the α-subunit PAS domain from Manduca sexta (Ms) sGC was solved at 1.8 Å resolution revealing the expected PAS fold but with an additional β strand and a shorter Fα helix. CO binding measurements on different Ms sGC N-terminal constructs and the β₁ (1-380) construct revealed that the α-subunit keeps the β₁ H-NOX domain in an inhibited conformation and this inhibition is relieved by removal of the α-subunit or by addition of stimulatory compounds such as compound YC-1. Linked-equilibria measurements on the N-terminal constructs show that YC-1 binding affinity is increased in the presence of CO. Surface plasmon resonance (SPR) studies on the in-vitro biotinylated constructs showed that YC-1 binds near or directly to the β₁ H-NOX domain. Computational and mutational analysis of the β₁ H-NOX domain revealed a pocket important in allostery and drug action. Finally, we show that the coiled coil domain plays an important role in allosteric regulation of the β₁ H-NOX domain and possibly in signal transduction. Our data are consistent with a model of allosteric activation in which the α-subunit and the coiled coil domains function to keep heme in a low affinity conformation while YC-1 binding to the β₁ H-NOX domain switches heme to a high affinity conformation, and sGC to its high activity form.