Korean red ginseng water extract (KG-WE) has known beneficial effects on the cardiovascular system via inducting nitric oxide (NO) production in endothelium. Endothelial arginase inhibits the activity of endothelial nitric oxide synthase (eNOS) by substrate depletion, thereby reducing NO bioavailability and contributing to vascular diseases including hypertension, aging, and atherosclerosis. In the present study, we demonstrate that KG-WE inhibits arginase activity and negatively regulates NO production and reactive oxygen species generation in endothelium. This is associated with increased dimerization of eNOS without affecting the protein expression levels of either arginase or eNOS. In a vascular tension assay, when aortas isolated from wild type mice were incubated with KG-WE, NO-dependent enhanced vasorelaxation was observed. Furthermore, KG-WE administered via by drinking water to atherogenic model mice being fed high cholesterol diet improved impaired vascular function. Taken together, these results suggest that KG-WE may exert vasoprotective effects through augmentation of NO signaling by inhibiting arginase. Therefore, KG-WE may be useful in the treatment of vascular diseases derived from endothelial dysfunction, such as atherosclerosis.