•  Diseases of the lower urinary tract are associated with dysfunctions of cellular mechanisms that regulate smooth muscle tone. Nitric oxide (NO) mediates relaxation of most smooth muscle‐containing tissues via NO‐sensitive guanylyl cyclase (NO‐GC). Correlation of cellular localization with function of NO‐GC in the murine lower urinary tract has not been previously performed. •  Using cell‐specific knock‐out mice, we demonstrate that NO‐GC is expressed exclusively in smooth muscle cells of the urethral sphincter and mediates NO‐induced relaxation. •  In bladder detrusor, NO‐GC is not detected in smooth muscle cells but rather in platelet‐derived growth factor receptor α‐positive interstitial cells. NO‐GC in these cells does not contribute to NO‐induced relaxation; therefore, bladder detrusor smooth muscle appears to be unique as it is not relaxed by NO. •  The correlation of NO‐GC localization and function regarding smooth muscle relaxation allows the clinical use of compounds acting within NO/cGMP signalling to be assessed. Abstract  The action of nitric oxide (NO) to stimulate NO‐sensitive guanylyl cyclase (NO‐GC), followed by production of cGMP, and eventually to cause smooth muscle relaxation is well known. In the lower urinary tract (LUT), in contrast to the cardiovascular system and the gastrointestinal tract, specific localization in combination with function of NO‐GC has not been investigated to date. Consequently, little is known about the mechanisms regulating relaxation of the lower urinary tract in general and the role of NO‐GC‐expressing cells in particular. To study the distribution and function of NO‐GC in the murine lower urinary tract, we used internal urethral sphincter and bladder detrusor from global (GCKO) and smooth muscle cell‐specific (SM‐GCKO) NO‐GC knock‐out mice for immunohistochemical analyses and organ bath experiments. In urethral sphincter, NO‐GC‐positive immunofluorescence was confined to smooth muscle cells (SMCs). Deletion of NO‐GC in SMCs abolished NO‐induced relaxation. In bladder detrusor, exposure to NO did not cause relaxation although immunohistochemistry uncovered the existence of NO‐GC in the tissue. In contrast to the urethral sphincter, expression of NO‐GC in bladder detrusor was limited to platelet‐derived growth factor receptor α (PDGFRα)‐positive interstitial cells. In conclusion, NO‐GC found in SMCs of the urethral sphincter mediates NO‐induced relaxation; bladder detrusor is unique as NO‐GC is not expressed in SMCs and, thus, NO does not induce relaxation. Nevertheless, NO‐GC expression was found in PDGFRα‐positive interstitial cells of the murine bladder with an as yet unknown function. Further investigation is needed to clarify the role of NO‐GC in the detrusor.