CALCITONIN gene-related peptide (CGRP) is a 37-amino-acid peptide produced by alternative processing of messenger RNA from the calcitonin gene^1,2. CGRP is one of the most potent vasodilators known³. It occurs in and is released from perivascular nerves^1,4 and has been detected in the blood stream^5–7, suggesting that it is important in the control of blood flow^8,9. The mechanism by which it dilates arteries is not known. Here, we report that arterial dilations in response to CGRP are partially reversed by blockers of the ATP-sensitive potassium channel (K_ATP), glibenclamide^10–12 and barium^10,13. We also show that CGRP hyperpolarizes arterial smooth muscle and that blockers of K_ATP channels reverse this hyperpolarization. Finally, we show that CGRP opens single K⁺ channels in patches on single smooth muscle cells from the same arteries. We propose that activation of K_ATP channels underlies a substantial part of the relaxation produced by CGRP.