In addition to being a peptidase, the angiotensin-converting enzyme (ACE) can be phosphorylated and involved in signal transduction. We evaluated the role of ACE in granulocyte-colony-stimulating factor (G-CSF)-induced hematopoietic progenitor cell (HPC) mobilization and detected a significant increase in mice-lacking ACE. Transplantation experiments revealed that the loss of ACE in the HPC microenvironment rather than in the HPCs increased mobilization. Indeed, although ACE was expressed by a small population of bone-marrow cells, it was more strongly expressed by endosteal bone. Interestingly, there was a physical association of ACE with the G-CSF receptor (CD114), and G-CSF elicited ACE phosphorylation on Ser1270 in vivo and in vitro. A transgenic mouse expressing a non-phosphorylatable ACE (ACE^S/A) mutant demonstrated increased G-CSF-induced HPC mobilization and decreased G-CSF-induced phosphorylation of STAT3 and STAT5. These results indicate that ACE expression/phosphorylation in the bone-marrow niche interface negatively regulates G-CSF-induced signaling and HPC mobilization.