Two GA pilots reported a near midair collision while departing pao.

Attributes
ACN	1555486
Time
Date	201806
Local Time Of Day	1201-1800
Place
Locale Reference	NUQ.Airport
State Reference	CA
Environment
Flight Conditions	VMC
Light	Daylight
Aircraft 1
Make Model Name	Small Aircraft
Operating Under FAR Part	Part 91
Flight Phase	Climb
Route In Use	Vectors
Flight Plan	None
Person 1
Function	Pilot Not Flying
Qualification	Flight Crew Instrument Flight Crew Commercial
Experience	Flight Crew Last 90 Days 11 Flight Crew Total 296 Flight Crew Type 296
Person 2
Function	Pilot Flying
Qualification	Flight Crew Private
Experience	Flight Crew Last 90 Days 19 Flight Crew Total 285 Flight Crew Type 198
Events
Anomaly	Conflict NMAC
Miss Distance	Horizontal 500 Vertical 100

Narrative:

We departed palo alto airport (pao) on a left downwind departure on a 160 magnetic heading. We were handed off to moffet tower (nuq) and checked in at 1;900 feet. Moffet tower instructed us to descend and maintain at or below 1;500 feet for traffic at 12 o'clock; 1.5 nm away. We acknowledged; and replied that we did not have the traffic in sight. As we began our descent out of 1;900 feet; we converged on a blue and white [aircraft] descending straight at us. The [aircraft] dove beneath our flight path and made a left turn (from their perspective) and we initiated a climb to avoid them. We believe the [aircraft] was on an instrument approach into san carlos airport (sql) and had received vectors for their initial approach. The [aircraft] appeared to have already descended below 2;000 feet before reaching their final approach point cuzup; which is why they converged on our position so rapidly.

Original NASA ASRS Text

Title: Two GA pilots reported a NMAC while departing PAO.

Narrative: We departed Palo Alto Airport (PAO) on a left downwind departure on a 160 magnetic heading. We were handed off to Moffet Tower (NUQ) and checked in at 1;900 feet. Moffet Tower instructed us to descend and maintain at or below 1;500 feet for traffic at 12 o'clock; 1.5 nm away. We acknowledged; and replied that we did not have the traffic in sight. As we began our descent out of 1;900 feet; we converged on a blue and white [aircraft] descending straight at us. The [aircraft] dove beneath our flight path and made a left turn (from their perspective) and we initiated a climb to avoid them. We believe the [aircraft] was on an instrument approach into San Carlos Airport (SQL) and had received vectors for their initial approach. The [aircraft] appeared to have already descended below 2;000 feet before reaching their final approach point CUZUP; which is why they converged on our position so rapidly.

Data retrieved from NASA's ASRS site and automatically converted to unabbreviated mixed upper/lowercase text. This report is for informational purposes with no guarantee of accuracy. See NASA's ASRS site for official report.