Angiotensin-converting enzyme 2 (ACE2), a key regulator of the renin-angiotensin system (RAS), maintains central nervous system (CNS) homeostasis by metabolizing neuroinflammatory peptides like angiotensin II (Ang II) and apelin-13, thereby exerting neuroprotective effects. Recent evidence underscores ACE2's paradoxical roles in neurodegeneration: its loss of function due to SARS-CoV-2 spike protein binding exacerbates neuroinflammation and cognitive decline, while its upregulation may mitigate AD pathology by reducing amyloid-β (Aβ) accumulation and tau hyperphosphorylation. The COVID-19 pandemic has further highlighted ACE2 axis dysregulation as a potential accelerator of AD progression, with studies reporting elevated biomarkers of neurodegeneration in post-COVID patients. Therefore, in this review, we highlight the emerging insights into ACE2's dual role in AD and other neurodegenerative diseases, emphasizing its interactions with microglial activation, blood-brain barrier integrity, and mitochondrial dysfunction. We also critically evaluate novel therapeutic strategies, including recombinant ACE2, ACE2-derived peptides, and gene therapy approaches designed to restore RAS balance without compromising viral defense mechanisms. By integrating mechanistic and clinical insights, this work highlights ACE2 as a promising target for neurodegenerative disease interventions.