Angiotensin-converting enzyme 2 (ACE2) is a receptor for cell entry of SARS-CoV-2, and recombinant soluble ACE2 protein inhibits SARS-CoV-2 infection as a decoy. ACE2 is a carboxypeptidase that degrades angiotensin II, thereby improving the pathologies of cardiovascular disease or acute lung injury. Here we show that B38-CAP, an ACE2-like enzyme, is protective against SARS-CoV-2-induced lung injury. Endogenous ACE2 expression is downregulated in the lungs of SARS-CoV-2-infected hamsters, leading to elevation of angiotensin II levels. Recombinant Spike also downregulates ACE2 expression and worsens the symptoms of acid-induced lung injury. B38-CAP does not neutralize cell entry of SARS-CoV-2. However, B38-CAP treatment improves the pathologies of Spike-augmented acid-induced lung injury. In SARS-CoV-2-infected hamsters or human ACE2 transgenic mice, B38-CAP significantly improves lung edema and pathologies of lung injury. These results provide the first in vivo evidence that increasing ACE2-like enzymatic activity is a potential therapeutic strategy to alleviate lung pathologies in COVID-19 patients.