This study evaluated the effects of localized delivery of nitric oxide (NO) from hydrogels covalently modified with S-nitrosocysteine (Cys-NO) on neoinitma formation, a key component of restenosis, in a rat balloon-injury model. Soluble Cys-NO was used in preliminary studies to identify dosage ranges that were able to simultaneously inhibit smooth muscle cell proliferation, enhance endothelial cell proliferation, and reduce platelet adhesion. Photo-cross-linked PEG-based hydrogels were formed with covalently immobilized Cys-NO. These materials release NO for approximately 24 h and can be applied to tissues and photo-cross-linked in situ to form local drug-delivery systems. Localized delivery of NO from hydrogels containing Cys-NO inhibited neointima formation in a rat balloon-injury model by approximately 75% at 14 days.