A novel angiotensin-converting enzyme (ACE) homolog, named ACE2, was recently described. ACE2 degrades Ang II, a peptide with vasoconstrictive and proliferative effects, to generate Ang-(1-7), which, acting through its receptor Mas, exerts vasodilatory and antiproliferative actions. In addition, ACE2 is a multifunctional enzyme and its actions on other vasoactive peptides can also contribute to its vasoactive effects. The discovery of ACE2 corroborates the establishment of two counter-regulatory arms within the renin-angiotensin system. The first arm is formed by the classical pathway involving the ACE-Ang II-AT(1)-receptor axis, and the second arm is constituted by the ACE2-Ang-(1-7)-Mas-receptor axis. Owing to its characteristics, the ACE2-Ang-(1-7)-Mas axis may represent new possibilities for developing novel therapeutic strategies for the treatment of hypertension and cardiovascular diseases. In this review, we will summarize the biochemical and pathophysiological aspects of ACE2 with particular focus on its role in the heart.