In vitro, ACE2 translocates to the nucleus to induce SARS-CoV-2 replication. Here, using digital spatial profiling of lung tissues from SARS-CoV-2-infected golden Syrian hamsters, we show that a specific and selective peptide inhibitor of nuclear ACE2 (NACE2i) inhibits viral replication two days after SARS-CoV-2 infection. Moreover, the peptide also prevents inflammation and macrophage infiltration, and increases NK cell infiltration in bronchioles. NACE2i treatment increases the levels of the active histone mark, H3K27ac, restores host translation in infected hamster bronchiolar cells, and leads to an enrichment in methylated ACE2 in hamster bronchioles and lung macrophages, a signature associated with virus protection. In addition, ACE2 methylation is increased in myeloid cells from vaccinated patients and associated with reduced SARS-CoV-2 spike protein expression in monocytes from individuals who have recovered from infection. This protective epigenetic scarring of ACE2 is associated with a reduced latent viral reservoir in monocytes/macrophages and enhanced immune protection against SARS-CoV-2. Nuclear ACE2 may represent a therapeutic target independent of the variant and strain of viruses that use the ACE2 receptor for host cell entry.