To circumvent the devastating pandemic caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) infection, a humanized decoy antibody (ACE2-Fc fusion protein) was designed to target the interaction between viral spike protein and its cellular receptor, angiotensin-converting enzyme 2 (ACE2). First, we demonstrated that ACE2-Fc could specifically abrogate virus replication by blocking the entry of SARS-CoV-2 spike-expressing pseudotyped virus into both ACE2-expressing lung cells and lung organoids. The impairment of viral entry was not affected by virus variants, since efficient inhibition was also observed in six SARS-CoV-2 clinical strains, including the D614G variants which have been shown to exhibit increased infectivity. The preservation of peptidase activity also enables ACE2-Fc to reduce the angiotensin II-mediated cytokine cascade. Furthermore, this Fc domain of ACE2-Fc was shown to activate NK cell degranulation after co-incubation with Spike-expressing H1975 cells. These promising characteristics potentiate the therapeutic prospects of ACE2-Fc as an effective treatment for COVID-19.