Nitric oxide activates guanylate cyclase and increases guanosine 3',5'-monophosphate levels in various tissue preparations.

Murad demonstrated that nitroglycerin and related drugs worked by releasing nitric oxide into the body, which relaxed smooth muscle by elevating intracellular cyclic GMP. With W. P. Arnold, C. K. Mittal, S. Katsuki.

In 1998 the Nobel Prize in Physiology of Medicine was awarded jointly to Robert F. Furchgott, Louis J. Ignarro and Ferid Murad "for their discoveries concerning nitric oxide as a signalling molecule in the cardiovascular system."