Angiotensin (Ang)-(1-7) is now recognized as a biologically active component of the renin-angiotensin system (RAS). The discovery of the angiotensin-converting enzyme homologue ACE2 revealed important metabolic pathways involved in the Ang-(1-7) synthesis. This enzyme can form Ang-(1-7) from Ang II or less efficiently through hydrolysis of Ang I to Ang-(1-9) with subsequent Ang-(1-7) formation. Additionally, it is well established that the G protein-coupled receptor Mas is a functional ligand site for Ang-(1-7). The axis formed by ACE2/Ang-(1-7)/Mas represents an endogenous counter regulatory pathway within the RAS whose actions are opposite to the vasoconstrictor/proliferative arm of the RAS constituted by ACE/Ang II/AT(1) receptor. In this review we will discuss recent findings concerning the biological role of the ACE2/Ang-(1-7)/Mas arm in the cardiovascular and pulmonary system. Also, we will highlight the initiatives to develop potential therapeutic strategies based on this axis.