Angiotensin-converting enzyme (ACE) produces the vasoconstrictor angiotensin II. The ACE protein is composed of two homologous domains, each binding zinc and each independently catalytic. To assess the physiologic significance of the two ACE catalytic domains, we used gene targeting in mice to introduce two point mutations (H395K and H399K) that selectively inactivated the ACE N-terminal catalytic site. This modification does not affect C-terminal enzymatic activity or ACE protein expression. In addition, the testis ACE isozyme is not affected by the mutations. Analysis of homozygous mutant mice (termed ACE 7/7) showed normal plasma levels of angiotensin II but an elevation of plasma and urine N-acetyl-Ser-Asp-Lys-Pro, a peptide suggested to inhibit bone marrow maturation. Despite this, ACE 7/7 mice had blood pressure, renal function, and hematocrit that were indistinguishable from wild-type mice. We also studied compound heterozygous mice in which one ACE allele was null (no ACE expression) and the second allele encoded the mutations selectively inactivating the N-terminal catalytic domain. These mice produced approximately half the normal levels of ACE, with the ACE protein lacking N-terminal catalytic activity. Despite this, the mice have a phenotype indistinguishable from wild-type animals. This study shows that, in vivo, the presence of the C-terminal ACE catalytic domain is sufficient to maintain a functional renin-angiotensin system. It also strongly suggests that the anemia present in ACE null mice is not due to the accumulation of the peptide N-acetyl-Ser-Asp-Lys-Pro.