Chronic obstructive pulmonary disease (COPD) is the third leading cause of death globally. Cumulative evidence has implicated renin-angiotensin system (RAS) in the pathogenesis of COPD. Alveolar macrophages (AMs) are the first line immune defense in the respiratory system and play a critical role in the lung homeostasis. This study aimed to investigate the role of AMs in contributing to the protective effects of angiotensin II type-2 receptor (AT2R) activation in cigarette smoke (CS)-induced COPD. The AM polarization, phagocytosis and metabolism, and the underlying biochemical mechanisms of compound 21 (C21), a selective and potent non-peptide small molecule AT2R agonist, were evaluated in a two-week CS-induced COPD mouse model. C21 restored AM phagocytosis ability, reversing CS-induced AM phagocytosis impairment. CS exposure polarized AMs towards M1 phenotype, whereas, C21 skewed the CS-exposed AMs towards M2 phenotype. C21 reprogrammed CS-exposed AM metabolism from a high glycolysis-driven process to support inflammation energy demand to a high mitochondrial respiration process to limit inflammation. Besides, C21 upregulated AT2R and Mas receptor levels in CS-exposed AMs, favoring the anti-inflammatory Ang II/AT2R axis and Ang 1–7/Mas axis in the RAS. C21 restored the normal levels of sirtuin 1 (SIRT1) and MAPK phosphatase 1 (MKP1) in CS-exposed AMs, leading to the reduction of phospho-p38, phospho-ERK and p65 subunit of NF-κB levels in CS-exposed AMs. We report here for the first time that AT2R agonist C21 acts by boosting the protective functions of AMs against CS-induced COPD, and our results support the development of AT2R agonist for the treatment of COPD.