Angiotensin‐converting enzyme 2 (ACE2) is highly expressed in the kidney and hydrolyzes angiotensin II (Ang II) to Ang(1–7). Since Ang II is a strong activator of oxidative stress, we reasoned that ACE2 could be involved in the regulation of renal oxidative stress by governing the levels of Ang II. We, therefore, assessed levels of oxidative stress in kidney cortex of ACE2 knockout and wild‐type littermate mice under baseline conditions. We found multiple markers of increased oxidative stress in ACE2KO mice. NADPH oxidase activity was increased in kidney cortex from ACE2KO mice as compared to WT (227 ± 24% vs.100 ± 19%, P < 0.001). However, kidney catalase and superoxide dismutase activities were not different between groups. Exogenous Ang II was degraded less efficiently by kidneys from ACE2KO mice than WT mice, and administration of an AT1R blocker (losartan 30 mg/kg/day) resulted in normalization of NADPH oxidase activity in the ACE2KO. These findings suggest that an AT1R‐dependent mechanism contributes to increased ROS observed in the ACE2KO. This study demonstrates that genetic deficiency of ACE2 activity in mice fosters oxidative stress in the kidney in the absence of overt hypertension and is associated with reduced kidney capacity to hydrolyze Ang II. ACE2KO mice serve as a novel in vivo model to examine the role of overactivity of NADPH oxidase in kidney function.