Prostacyclin released from the endothelium is capable of relaxing vascular smooth muscle. Here, we review the mechanisms underpinning this relaxation, with a focus on the role of smooth muscle hyperpolarization. The contribution of endothelium-derived prostacyclin to overall blood pressure is discussed. The role of prostacyclin in determining vasodilation in different vascular beds, especially in relation to sex steroid status and in pregnancy, is also discussed. Interactions between prostacyclin and other endothelium-derived vasodilators are reviewed. The synthetic pathway for prostanoid production, including prostacyclin, is upregulated in many diseases and drugs that interfere with this pathway are in widespread use. Emerging information suggests that these drugs may impact on endothelial prostacyclin production, with less than optimal consequences for thrombus formation and vasodilation.