ACE2 protects against severe acute lung injury. Acute respiratory distress syndrome (ARDS), the most severe form of acute lung injury, has a high mortality rate. ACE2, a homologue of ACE, regulates the renin-angiotensin system. ACE2 inactivates angiotensin II and is a negative regulator of the system. It is also a receptor for SARS coronavirus. This study shows that ACE2 and the angiotensin II type 2 receptor (AT2) protect mice from severe acute lung injury caused by acid aspiration or sepsis. Conversely, ACE, angiotensin II, and the angiotensin II type 1a receptor (AT1a) promote disease. Mice deficient in Ace show improved disease, and recombinant ACE2 protects mice from severe acute lung injury. These findings suggest that ACE2 plays a critical role in acute lung injury and could be a potential therapy for ARDS. The renin-angiotensin system is important for blood pressure and fluid balance. ACE2 is a negative regulator of the system. ACE2 is expressed in the lungs, but its function in the lungs is not well understood. SARS coronavirus infections can lead to ARDS with high mortality. This study examined the effect of Ace2 gene deficiency in mouse models of lung failure. Acid aspiration caused rapid lung function impairment, increased alveolar wall thickness, oedema, bleeding, and inflammatory cell infiltration. Ace2 knockout mice showed worse lung function and more severe injury. Sepsis also caused lung failure, with Ace2 knockout mice showing worse outcomes. Endotoxin challenge also worsened lung injury in Ace2 knockout mice. To test whether ACE2 is essential for disease, recombinant human ACE2 (rhuACE2) was used. rhuACE2 reduced lung injury in Ace2 knockout mice and wild-type mice. Catalytically inactive ACE2 did not rescue the lung phenotype. These results show that ACE2's catalytic activity protects lungs from injury. ACE2 and ACE are central enzymes in the renin-angiotensin system. ACE cleaves angiotensin I to generate angiotensin II, while ACE2 inactivates angiotensin II. Acid aspiration reduced ACE2 expression but not ACE levels. Only catalytically active ACE2 improved lung injury in mutant and wild-type mice. Angiotensin II levels increased in wild-type mice after acid aspiration, and further increased in Ace2 knockout mice. This suggests that acute lung injury decreases ACE2 expression and increases AngII production. ACE promotes disease pathogenesis through increased AngII production, while ACE2 alleviates it. ACE2 and AT2 receptors protect against lung injury. Exogenous ACE2 reduces acute lung failure in Ace2 knockout and wild-type mice. These findings highlight a new role for the renin-angiotensin system in acute lung injury and show thatACE2 protects against severe acute lung injury. Acute respiratory distress syndrome (ARDS), the most severe form of acute lung injury, has a high mortality rate. ACE2, a homologue of ACE, regulates the renin-angiotensin system. ACE2 inactivates angiotensin II and is a negative regulator of the system. It is also a receptor for SARS coronavirus. This study shows that ACE2 and the angiotensin II type 2 receptor (AT2) protect mice from severe acute lung injury caused by acid aspiration or sepsis. Conversely, ACE, angiotensin II, and the angiotensin II type 1a receptor (AT1a) promote disease. Mice deficient in Ace show improved disease, and recombinant ACE2 protects mice from severe acute lung injury. These findings suggest that ACE2 plays a critical role in acute lung injury and could be a potential therapy for ARDS. The renin-angiotensin system is important for blood pressure and fluid balance. ACE2 is a negative regulator of the system. ACE2 is expressed in the lungs, but its function in the lungs is not well understood. SARS coronavirus infections can lead to ARDS with high mortality. This study examined the effect of Ace2 gene deficiency in mouse models of lung failure. Acid aspiration caused rapid lung function impairment, increased alveolar wall thickness, oedema, bleeding, and inflammatory cell infiltration. Ace2 knockout mice showed worse lung function and more severe injury. Sepsis also caused lung failure, with Ace2 knockout mice showing worse outcomes. Endotoxin challenge also worsened lung injury in Ace2 knockout mice. To test whether ACE2 is essential for disease, recombinant human ACE2 (rhuACE2) was used. rhuACE2 reduced lung injury in Ace2 knockout mice and wild-type mice. Catalytically inactive ACE2 did not rescue the lung phenotype. These results show that ACE2's catalytic activity protects lungs from injury. ACE2 and ACE are central enzymes in the renin-angiotensin system. ACE cleaves angiotensin I to generate angiotensin II, while ACE2 inactivates angiotensin II. Acid aspiration reduced ACE2 expression but not ACE levels. Only catalytically active ACE2 improved lung injury in mutant and wild-type mice. Angiotensin II levels increased in wild-type mice after acid aspiration, and further increased in Ace2 knockout mice. This suggests that acute lung injury decreases ACE2 expression and increases AngII production. ACE promotes disease pathogenesis through increased AngII production, while ACE2 alleviates it. ACE2 and AT2 receptors protect against lung injury. Exogenous ACE2 reduces acute lung failure in Ace2 knockout and wild-type mice. These findings highlight a new role for the renin-angiotensin system in acute lung injury and show that