In arterial smooth muscle, Ca2+ is a pivotal modulator of vascular tone. Nicotinic acid adenine dinucleotide phosphate (NAADP) is a potent Ca2+ mobilizer, releasing Ca2+ from lysosomal‐type acidic stores. NAADP can act as an agonist by binding to two pore channels, with the structural analogue Ned‐19 acting as an antagonist. We investigated the actions of NAADP in arterial smooth muscle using isolated rat mesenteric arteries. In pressurized arteries, confocal imaging of the intrinsic fluorescence of Ned‐19 demonstrated an overlap with a subpopulation of acidic organelles labeled with Lysotracker Green. In arteries mounted on the wire myograph, tone generated with the thromboxane mimetic U46619 was rapidly reversed when exposed to the cell‐permeant acetoxymethylester of NAADP (NAADP‐AM). This relaxation occurred in both endothelium‐intact and ‐denuded preparations, and was sensitive to an inhibitor of large‐conductance K+ channels (BKCa, iberiotoxin). Finally, we used immunohistochemistry in pressurized arteries to characterize the distribution of BKCa channels and lysosomal associated membrane protein (LAMP‐2). In conclusion, these data support a signalling microdomain coupling NAADP‐mediated Ca2+ release from acidic stores to opening of BKCa channels, suggesting a novel potential mechanism for modulation of vascular tone. Supported by the British Heart Foundation and Wellcome Trust, UK.