The farnesoid X receptor (FXR, NR1H4) is a bile acid-responsive nuclear receptor that plays critical roles in the transcriptional regulation genes involved in cholesterol, bile acid, triglyceride, and carbohydrate metabolism. By microarray analysis of hepatic genes from female Zucker diabetic fatty (ZDF) rats treated with the FXR agonist GW4064, we have identified dimethylarginine dimethylaminohydrolase-1 (DDAH1) as an FXR target gene. DDAH1 is a key catabolic enzyme of asymmetric dimethylarginine (ADMA), a major endogenous nitric-oxide synthase inhibitor. Sequence analysis of the DDAH1 gene reveals the presence of an FXR response element (FXRE) located 90 kb downstream of the transcription initiation site and within the first intron. Functional analysis of the putative FXRE demonstrated GW4064 dose-dependent transcriptional activation from the element, and we have demonstrated that the FXRE sequence binds the FXR-RXR heterodimer. In vivo administration of GW4064 to female ZDF rats promoted a dose-dependent and >6-fold increase in hepatic DDAH1 gene expression. The level of serum ADMA was reduced concomitantly. These findings provide a mechanism by which FXR may increase endothelium-derived nitric oxide levels through modulation of serum ADMA levels via direct regulation of hepatic DDAH1 gene expression. Thus, beneficial clinical outcomes of FXR agonist therapy may include prevention of atherosclerosis and improvement of the metabolic syndrome.