The heme domain (iNOS(heme)) of inducible nitric oxide synthase (iNOS) was expressed in Escherichia coli and purified to homogeneity. Characterization of the expressed iNOS(heme) shows it to behave in all respects like full-length iNOS. iNOS(heme) is isolated without bound pterin but can be readily reconstituted with (6R)-5,6,7,8-tetrahydro-L-biopterin (H(4)B) or other pterins. The reactivity of pterin-bound and pterin-free iNOS(heme) was examined, using sodium dithionite as the reductant. H(4)B-bound iNOS(heme) catalyzes both steps of the NOS reaction, hydroxylating arginine to N(G)-hydroxy-L-arginine (NHA) and oxidizing NHA to citrulline and *NO. Maximal product formation (0.93 plus minus 0.12 equiv of NHA from arginine and 0.83 plus minus 0.08 equiv of citrulline from NHA) requires the addition of 2 to 2.5 electron equiv. Full reduction of H(4)B-bound iNOS(heme) with dithionite also requires 2 to 2.5 electron equiv. These data together demonstrate that fully reduced H(4)B-bound iNOS(heme) is able to catalyze the formation of 1 equiv of product in the absence of electrons from dithionite. Arginine hydroxylation requires the presence of a bound, redox-active tetrahydropterin; pterin-free iNOS(heme) or iNOS(heme) reconstituted with a redox-inactive analogue, 6(R,S)-methyl-5-deaza-5,6,7,8-tetrahydropterin, did not form NHA under these conditions. H(4)B has an integral role in NHA oxidation as well. Pterin-free iNOS(heme) oxidizes NHA to citrulline, N(delta)-cyanoornithine, an unidentified amino acid, and NO(-). Maximal product formation (0.75 plus minus 0.01 equiv of amino acid products) requires the addition of 2 to 2.5 electron equiv, but reduction of pterin-free iNOS(heme) requires only 1 to 1.5 electron equiv, indicating that both electrons for the oxidation of NHA by pterin-free iNOS(heme) are derived from dithionite. These data provide strong evidence that H(4)B is involved in electron transfer in NOS catalysis.