Despite its known importance in the cardiovascular system, the specific role and impact of the angiotensin type 2 receptor (AT2R) in lung physiology and pathophysiology remain largely elusive. In this study, we highlight the distinct and specialized lung-specific roles of AT2R, primarily localized to an alveolar fibroblast subpopulation, in contrast to the angiotensin type 1 receptor (AT1R), which is almost exclusively expressed in lung pericytes. Evidence from our research demonstrates that the disruption of AT2R (AT2R-/y), is associated with a surge in oxidative stress and impaired lung permeability, which were further intensified by Hyperoxic Acute Lung Injury (HALI). With aging, AT2R-/y mice show an increase in oxidative stress, premature enlargement of airspaces, as well as increased mortality when exposed to hyperoxia as compared to age-matched WT mice. Our investigation into Losartan, an AT1R blocker, suggests that its primary HALI lung-protective effects are channeled through AT2R, as its protective benefits are absent in AT2R-/y mice. Importantly, a non-peptide AT2R agonist, Compound 21 (C21), successfully reverses lung oxidative stress and TGFβ activation in wild-type (WT) mice exposed to HALI. These findings suggest a possible paradigm shift in the therapeutic approach for lung injury and age-associated pulmonary dysfunction, from targeting AT1R with angiotensin receptor blockers (ARBs) towards boosting the protective function of AT2R.