•  Relaxation of vascular smooth muscle, which increases blood vessel diameter, is often mediated through vasodilator‐induced elevations of intracellular 3′‐5′‐cyclic adenosine monophosphate (cAMP), although the mechanisms are incompletely understood. •  In this study we investigate the role of the novel cAMP effector exchange protein directly activated by cAMP (Epac) in mediating vasorelaxation in rat mesenteric arteries. •  We show that Epac mediates vasorelaxation in mesenteric arteries by facilitating the opening of several subtypes of Ca2+‐sensitive K+ channel within the endothelium and on vascular smooth muscle. •  Epac‐mediated hyperpolarization of the smooth muscle membrane brought about by opening of these channels acts to limit Ca2+ entry via voltage‐gated Ca2+ channels leading to vasorelaxation. •  This represents a potentially important, previously uncharacterised mechanism through which vasodilator‐induced elevation of cAMP can regulate vascular tone and thus blood flow. Abstract  Vasodilator‐induced elevation of intracellular cyclic AMP (cAMP) is a central mechanism governing arterial relaxation but is incompletely understood due to the diversity of cAMP effectors. Here we investigate the role of the novel cAMP effector exchange protein directly activated by cAMP (Epac) in mediating vasorelaxation in rat mesenteric arteries. In myography experiments, the Epac‐selective cAMP analogue 8‐pCPT‐2′‐O‐Me‐cAMP‐AM (5 μm, subsequently referred to as 8‐pCPT‐AM) elicited a 77.6 ± 7.1% relaxation of phenylephrine‐contracted arteries over a 5 min period (mean ± SEM; n= 6). 8‐pCPT‐AM induced only a 16.7 ± 2.4% relaxation in arteries pre‐contracted with high extracellular K+ over the same time period (n= 10), suggesting that some of Epac's relaxant effect relies upon vascular cell hyperpolarization. This involves Ca2+‐sensitive, large‐conductance K+ (BKCa) channel opening as iberiotoxin (100 nm) significantly reduced the ability of 8‐pCPT‐AM to reverse phenylephrine‐induced contraction (arteries relaxed by only 35.0 ± 8.5% over a 5 min exposure to 8‐pCPT‐AM, n= 5; P < 0.05). 8‐pCPT‐AM increased Ca2+ spark frequency in Fluo‐4‐AM‐loaded mesenteric myocytes from 0.045 ± 0.008 to 0.103 ± 0.022 sparks s‐1μm‐1 (P < 0.05) and reversibly increased both the frequency (0.94 ± 0.25 to 2.30 ± 0.72 s−1) and amplitude (23.9 ± 3.3 to 35.8 ± 7.7 pA) of spontaneous transient outward currents (STOCs) recorded in isolated mesenteric myocytes (n= 7; P < 0.05). 8‐pCPT‐AM‐activated STOCs were sensitive to iberiotoxin (100 nm) and to ryanodine (30 μm). Current clamp recordings of isolated myocytes showed a 7.9 ± 1.0 mV (n= 10) hyperpolarization in response to 8‐pCPT‐AM that was sensitive to iberiotoxin (n= 5). Endothelial disruption suppressed 8‐pCPT‐AM‐mediated relaxation in phenylephrine‐contracted arteries (24.8 ± 4.9% relaxation after 5 min of exposure, n= 5; P < 0.05), as did apamin and TRAM‐34, blockers of Ca2+‐sensitive, small‐ and intermediate‐conductance K+ (SKCa and IKCa) channels, respectively, and NG‐nitro‐l‐arginine methyl ester, an inhibitor of nitric oxide synthase (NOS). In Fluo‐4‐AM‐loaded mesenteric endothelial cells, 8‐pCPT‐AM induced a sustained increase in global Ca2+. Our data suggest that Epac hyperpolarizes smooth muscle by (1) increasing localized Ca2+ release from ryanodine receptors (Ca2+ sparks) to activate BKCa channels, and (2) endothelial‐dependent mechanisms involving the activation of SKCa/IKCa channels and NOS. Epac‐mediated smooth muscle hyperpolarization will limit Ca2+ entry via voltage‐sensitive Ca2+ channels and represents a novel mechanism of arterial relaxation.