Overproduction of reactive oxygen species, i.e., oxidative stress, is associated with the activation of redox signaling pathways linking to inflammatory insults and cardiovascular diseases by impairing endothelial function and consequently blood flow dysregulation due to microvascular dysfunction. This review focuses on the regulation of vasomotor function in the coronary microcirculation by endothelial nitric oxide (NO) during oxidative stress and inflammation related to the activation of L-arginine consuming enzyme arginase. Superoxide produced in the vascular wall compromises vasomotor function by not only scavenging endothelium-derived NO but also inhibiting prostacyclin synthesis due to formation of peroxynitrite. The upregulation of arginase contributes to the deficiency of endothelial NO and microvascular dysfunction in various vascular diseases by initiating or following oxidative stress and inflammation. Hydrogen peroxide, a diffusible and stable oxidizing agent, exerts vasodilator function and plays important roles in the physiological regulation of coronary blood flow. In occlusive coronary ischemia, the release of hydrogen peroxide from the microvasculature helps to restore vasomotor function of coronary collateral microvessels with exercise training. However, excessive production and prolonged exposure of microvessels to hydrogen peroxide impairs NO-mediated endothelial function by reducing L-arginine availability through hydroxyl radical-dependent upregulation of arginase. The redox signaling can be a double-edged sword in the microcirculation, which helps tissue survival in one way by improving vasomotor regulation and elicits oxidative stress and tissue injury in the other way by causing vascular dysfunction. The impact of vascular arginase on the development of vasomotor dysfunction associated with angiotensin II receptor activation, hypertension, ischemia-reperfusion, hypercholesterolemia, and inflammatory insults is discussed.