The question of why mammalian systems use nitric oxide (NO), a potentially hazardous and toxic diatomic, as a signaling molecule to mediate important functions such as vasodilation (blood pressure control) and nerve signal transduction initially perplexed researchers when this discovery was made in the 1980s. Through extensive research over the past two decades, it is now well rationalized why NO is used in vivo for these signaling functions, and that heme proteins play a dominant role in NO signaling in mammals. Key insight into the properties of heme-nitrosyl complexes that make heme proteins so well poised to take full advantage of the unique properties of NO has come from in-depth structural, spectroscopic, and theoretical studies on ferrous and ferric heme-nitrosyls. This Account highlights recent findings that have led to greater understanding of the electronic structures of heme-nitrosyls, and the contributions that model complex studies have made to elucidate Fe-NO bonding are highlighted. These results are then discussed in the context of the biological functions of heme-nitrosyls, in particular in soluble guanylate cyclase (sGC; NO signaling), nitrophorins (NO transport), and NO-producing enzymes. Central to this Account is the thermodynamic σ-trans effect of NO, and how this relates to the activation of the universal mammalian NO sensor sGC, which uses a ferrous heme as the high affinity "NO detection unit". It is shown via detailed spectroscopic and computational studies that the strong and very covalent Fe(II)-NO σ-bond is at the heart of the strong thermodynamic σ-trans effect of NO, which greatly weakens the proximal Fe-NHis (or Fe-SCys) bond in six-coordinate ferrous heme-nitrosyls. In sGC, this causes the dissociation of the proximally bound histidine ligand upon NO binding to the ferrous heme, inducing a significant conformational change that activates the sGC catalytic domain for the production of cGMP. This, in turn, leads to vasodilation and nerve signal transduction. Studies on ferrous heme-nitrosyl model complexes have allowed for a quantification of this thermodynamic σ-trans effect of NO, through the use of high-resolution crystal structures, binding constant studies, single-crystal vibrational spectroscopy and density functional theory (DFT) calculations. These studies have further identified the singly occupied molecular orbital (SOMO) of the NO complexes as the key MO that mediates the thermodynamic σ-trans effect of NO. In comparison to ferrous heme-nitrosyls, ferric heme-nitrosyls display thermodynamically much weaker Fe-NO bonds (from NO binding constants), but at the same time much stronger Fe-NO bonds in their ground states (from vibrational spectroscopy). Using spectroscopic investigations coupled to DFT calculations, this apparent contradiction has been rationalized with the involvement of at least three different electronic states in the binding/dissociation of NO to/from ferric hemes. This is of key significance for the release of NO from NO-producing enzymes like NOS, and further forms the basis for ferric hemes to serve as NO transporters in biological systems.