Some studies report that inhibition of angiotensin-converting enzyme (ACE) improves renal function in patients with congestive heart failure, whereas others report that renal deterioration is a frequent complication of treatment with ACE inhibitors. This article explores the mechanisms by which antagonism of the renin-angiotensin system improves kidney function in some patients while causing harm in others. ACE inhibition may alter renal blood flow, glomerular perfusion pressure, basement membrane activity and renal tubular function both directly and indirectly. In most patients, renal function is maintained as other neurohormonal mechanisms compensate for the negative effects and permit the positive effects (such as improved renal flow) to predominate. However, when physiologic characteristics or iatrogenic interventions (such as volume reduction or prostaglandin inhibition) limit the effectiveness of neurohormonal compensation to maintain renal autoregulation, clinically important deterioration in renal function may occur. An understanding of the renal effects of ACE inhibitors permits their safe and effective use in most patients with congestive heart failure.