As ACE2 is the critical SARS-CoV-2 receptor, we hypothesized that aerosol administration of clinical grade soluble human recombinant ACE2 (APN01) will neutralize SARS-CoV-2 in the airways, limit spread of infection in the lung, and mitigate lung damage caused by deregulated signaling in the renin-angiotensin (RAS) and Kinin pathways. Here, after demonstrating in vitro neutralization of SARS-CoV-2 by APN01, and after obtaining preliminary evidence of its tolerability and preventive efficacy in a mouse model, we pursued development of an aerosol formulation. As a prerequisite to a clinical trial, we evaluated both virus binding activity and enzymatic activity for cleavage of Ang II following aerosolization. We report successful aerosolization for APN01, retaining viral binding as well as catalytic RAS activity. Dose range-finding and IND-enabling repeat-dose aerosol toxicology testing were conducted in dogs. Twice daily aerosol administration for two weeks at the maximum feasible concentration revealed no notable toxicities. Based on these results, a Phase I clinical trial in healthy volunteers has now been initiated (NCT05065645), with subsequent Phase II testing planned for individuals with SARS-CoV-2 infection.