Activation of the intrarenal renin-angiotensin system (RAS) can elicit hypertension independently from the systemic RAS. However, the precise mechanisms by which intrarenal Ang II increases blood pressure have never been identified. To this end, we studied the responses of mice specifically lacking kidney angiotensin-converting enzyme (ACE) to experimental hypertension. Here, we show that the absence of kidney ACE substantially blunts the hypertension induced by Ang II infusion (a model of high serum Ang II) or by nitric oxide synthesis inhibition (a model of low serum Ang II). Moreover, the renal responses to high serum Ang II observed in wild-type mice, including intrarenal Ang II accumulation, sodium and water retention, and activation of ion transporters in the loop of Henle (NKCC2) and distal nephron (NCC, ENaC, and pendrin) as well as the transporter activating kinases SPAK and OSR1, were effectively prevented in mice that lack kidney ACE. These findings demonstrate that ACE metabolism plays a fundamental role in the responses of the kidney to hypertensive stimuli. In particular, renal ACE activity is required to increase local Ang II, to stimulate sodium transport in loop of Henle and the distal nephron, and to induce hypertension.