Earlier work from this laboratory demonstrated that apoptosis of alveolar epithelial cells (AECs) requires autocrine generation of angiotensin (ANG) II. More recent studies showed that angiotensin converting enzyme-2 (ACE-2), which degrades ANGII to form ANG1–7, is protective but severely downregulated in human and experimental lung fibrosis. Here it was theorized that ACE-2 and its product ANG1–7 might therefore regulate AEC apoptosis. To evaluate this hypothesis, the AEC cell line MLE-12 and primary cultures of rat AECs were exposed to the profibrotic apoptosis inducers ANGII or bleomycin (Bleo). Markers of apoptosis (caspase-9 or -3 activation and nuclear fragmentation), steady-state ANGII and ANG1–7, and JNK phosphorylation were measured thereafter. In the absence of Bleo, inhibition of ACE-2 by small interfering RNA or by a competitive inhibitor (DX600 peptide) caused a reciprocal increase in autocrine ANGII and corresponding decrease in ANG1–7 in cell culture media (both P < 0.05) and, moreover, induced AEC apoptosis. At baseline (without inhibitor), ANG1–7 in culture media was 10-fold higher than ANGII (P < 0.01). Addition of purified ANGII or bleomycin-induced caspase activation, nuclear fragmentation, and JNK phosphorylation in cultured AECs. However, preincubation with ANG1–7 (0.1 μM) prevented JNK phosphorylation and apoptosis. Moreover, pretreatment with A779, a specific blocker of the ANG1–7 receptor mas, prevented ANG1–7 blockade of JNK phosphorylation, caspase activation, and nuclear fragmentation. These data demonstrate that ACE-2 regulates AEC survival by balancing the proapoptotic ANGII and its antiapoptotic degradation product ANG1–7. They also suggest that ANG1–7 inhibits AEC apoptosis through the ANG1–7 receptor mas.