The discovery of angiotensin-converting enzyme 2 (ACE2) in 2000 is an important event in the renin-angiotensin system (RAS) story. This enzyme, an homolog of ACE, hydrolyzes angiotensin (Ang) I to produce Ang-(1-9), which is subsequently converted into Ang-(1-7) by a neutral endopeptidase and ACE. ACE2 releases Ang-(1-7) more efficiently than its catalysis of Ang-(1-9) by cleavage of Pro(7)-Phe(8) bound in Ang II. Thus, the major biologically active product of ACE2 is Ang-(1-7), which is considered to be a beneficial peptide of the RAS cascade in the cardiovascular system. This enzyme has 42% identity with the catalytic domain of ACE, is present in most cardiovascular-relevant tissues, and is an ectoenzyme as ACE. Despite these similarities, ACE2 is distinct from ACE. Since it is a monocarboxypeptidase, it has only 1 catalytic site and is insensitive to ACE inhibitors. As a result, ACE2 is a central enzyme in balancing vasoconstrictor and proliferative actions of Ang II with vasodilatory and antiproliferative effects of Ang-(1-7). In this review, we will summarize the role of ACE2 in the cardiovascular system and discuss the importance of ACE2-Ang-(1-7) axis in the control of normal cardiovascular physiology and ACE2 as a potential target in the development of novel therapeutic agents for cardiovascular diseases.