Reactive nitrogen species (RNS) are implicated in the pathophysiology of inflammatory lung diseases such as asthma and chronic obstructive pulmonary disease. The molecular mechanisms and signaling events involved in lung cell injury by RNS are still poorly understood. In the current study, we observe a novel anti-apoptotic response to nitric oxide (NO) exposure (via the NO donors 3-morpholine-syndnonimine (SIN1) or papa-NONOate) of human airway epithelial (HAE) cells. NO exposure via the NO donors increased cellular ceramide levels via ceramide synthase but did not trigger an apoptotic response. Rather, exposure to the NO donors promoted an increase in the protein-protein interaction between acidic sphingomyelinase (aSMase) and caspase-3, with aSMase sequestering caspase-3 and preventing its cleavage. In contrast, when aSMase was silenced in HAE cells or was knocked out in mice, an increase in cleaved caspase-3 was observed. This elevated caspase-3 cleavage was further augmented upon NO exposure (via SIN1 or papa-NONOate) of HAE cells and could be prevented by an inhibitor to ceramide synthase. These results demonstrate a novel mechanism of NO modulation of apoptosis, in which HAE cells exposed to NO via an NO donor induces ceramide generation via ceramide synthase. However, this ceramide induction does not lead to apoptosis unless aSMase is knocked down, allowing the release of caspase-3, its activation and execution of apoptosis.