Heme b + 3O2 + 3½NADPH + 3½H+ → biliverdin + Fe2+ + CO + 3½NADP+ + 3H2O
This reaction can occur in virtually every cell; the classic example is the formation of a bruise, which goes through different colors as it gradually heals: red heme to green biliverdin to yellow bilirubin. Under normal physiological conditions, the activity of heme oxygenase is highest in the spleen, where old erythrocytes are sequestrated and destroyed. In terms of molecular mechanisms, the enzyme facilitates the intramolecular hydroxylation of one meso carbon centre in the heme. 
Heme oxygenase expression is induced by oxidative stress, and in animal models increasing this expression seems to be protective. Carbon monoxide released from heme oxygenase reactions can influence vascular tone independently or influence the function of nitric oxide synthase. Carbon monoxide released from the reaction of free heme in the bloodstream of someone with the sickle-cell trait is believed to lessen the effects of cerebral Malaria.
^Ryter, Stefan W.; Alam, Jawed; Choi, Augustine M. K. "Heme oxygenase-1/carbon monoxide: from basic science to therapeutic applications" Physiological Reviews (2006), 86(2), 583-650. doi:10.1152/physrev.00011.2005