While nephrologists often observe reduced hematocrit associated with inhibitors of angiotensin-converting enzyme (ACE), the basis for this effect is not well understood. We now report that two strains of ACE knockout mice have a normocytic anemia associated with elevated plasma erythropoietin levels. (51)Cr labeling of red cells showed that the knockout mice have a normal total blood volume but a reduced red cell mass. ACE knockout mice, which lack tissue ACE, are anemic despite having normal renal function. These mice have increased plasma levels of the peptide acetyl-SDKP, a possible stem cell suppressor. However, they also show low plasma levels of angiotensin II. Infusion of angiotensin II for 2 weeks increased hematocrit to near normal levels. These data suggest that angiotensin II facilitates erythropoiesis, a conclusion with implications for the management of chronically ill patients on inhibitors of the renin-angiotensin system.