1. Intact cells of Ps. denitrificans were found to reduce NO to N2O and the latter to N2 using lactate as the hydrogen donor. The cell-free extract reduced NO to N2O but not N2O to N2. These results of gas interconversion by intact cells or cell-free extract were nearly the same as the gas evolution from nitrite (1). 2. The optimal concentration of NO in the gas phase for the reducing activity of NO to N2O was 10 per cent and the optimal pH was 7.0–7.4. 3. Experiments on inhibitors of the reaction suggested that both heavy metal(s) and sulfhydryl groups were involved in the reduction of NO to N2O. 4. The addition of flavin nucleotide showed no effect on the NO reduction. 5. The reduction of NO to N2O was realized by the particulate fraction obtained from disrupted cells in the presence of lactate as the hydrogen donor. 6. Lactate, the leuco-forms of thionine, brilliant cresyl blue and methylene blue were effective electron donors in the NO reduction by the cell particles, whereas formate, malate, succinate, oxaloacetate, reduced dichlorophenolindophenol, NADH, NADH plus FMN and NADPH were found to be less or entirely not effective.