Despite tremendous progress in the understanding of COVID-19, mechanistic insight into immunological, disease-driving factors remains limited. We generated maVie16, a mouse-adapted SARS-CoV-2, by serial passaging of a human isolate. In silico modelling revealed how Spike mutations of maVie16 enhanced interaction with murine ACE2. MaVie16 induced profound pathology in BALB/c and C57BL/6 mice and the resulting mouse COVID-19 (mCOVID-19) replicated critical aspects of human disease, including early lymphopenia, pulmonary immune cell infiltration, pneumonia and specific adaptive immunity. Inhibition of the proinflammatory cytokines IFNγ and TNF substantially reduced immunopathology. Importantly, genetic ACE2-deficiency completely prevented mCOVID-19 development. Finally, inhalation therapy with recombinant ACE2 fully protected mice from mCOVID-19, revealing a novel and efficient treatment. Thus, we here present maVie16 as a new tool to model COVID-19 for the discovery of new therapies and show that disease severity is determined by cytokine-driven immunopathology and critically dependent on ACE2 in vivo.