Virtually all existing evidence on the function of angiotensin II (Ang II) in the regulation of tissue homeostasis and blood pressure regulation bears on the more restricted question of what other mechanisms or systems may amplify or inhibit the actions of this important peptide. Whereas there is evidence that Ang II may potentiate the effects of catecholamines, various cytokines and also growth factors, the repertoire of substances which may inhibit the actions of Ang II is more limited and has been restricted primarily to prostacyclin, bradykinin and nitric oxide. Advances in receptor pharmacology and introduction of selective antagonists to two of the receptor subtypes at which Ang II binds permitted a more critical examination of the functions of the renin angiotensin system in physiological and pathophysiological conditions, as well as uncovering the previously unsuspected possibility that within the biochemical pathways leading to the formation of the peptide the renin angiotensin system could process either its immediate precursor (angiotensin I) or the actual Ang II peptide into an alternative form, angiotensin-(1-7) [Ang-(1-7)], the function of which was to antagonize the effects of Ang II. We review here the biological actions of Ang-(1-7) and discuss how this discovery may change altogether the perception of how the renin angiotensin system functions in the regulation of tissue perfusion pressure and the regulation of salt and water metabolism.