The cell-free layer (CFL) width separating red blood cells in flowing blood from the endothelial cell membrane is shown to be a regulator of the balance between nitric oxide (NO) production by the endothelium and NO scavenging by blood hemoglobin. The CFL width is determined by hematocrit (Hct) and the vessel wall flow velocity gradient. These factors and blood and plasma viscosity determine vessel wall shear stress which regulates the production of NO in the vascular wall. Mathematical modeling and experimental findings show that vessel wall NO concentration is a strong nonlinear function of Hct and that small Hct variations have comparatively large effects on blood pressure regulation. Furthermore, NO concentration is a regulator of inflammation and oxygen metabolism. Therefore, small, sustained perturbations of Hctmay have long-term effects that can promote pro-hypertensive and pro-inflammatory conditions. In this context, Hct and its variability are directly related to vascular tone, peripheral vascular resistance, oxygen transport and delivery, and inflammation. These effects are relevant to the analysis and understanding of blood pressure regulation, as NO bioavailability regulates the contractile state of blood vessels. Furthermore, regulation of the CFL is a direct function of blood composition therefore understanding of its physiology relates to the design and management of fluid resuscitation fluids. From a medical perspective, these studies propose that it should be of clinical interest to note small variations in patient's Hct levels given their importance in modulating the CFL width and therefore NO bioavailability.