Treatment options for COVID-19 remain limited, especially during the early or asymptomatic phase. Here, we report a novel SARS-CoV-2 viral replication mechanism mediated by interactions between ACE2 and the epigenetic eraser enzyme LSD1, and its interplay with the nuclear shuttling importin pathway. Recent studies have shown a critical role for the importin pathway in SARS-CoV-2 infection, and many RNA viruses hijack this axis to re-direct host cell transcription. LSD1 colocalized with ACE2 at the cell surface to maintain demethylated SARS-CoV-2 spike receptor-binding domain lysine 31 to promote virus–ACE2 interactions. Two newly developed peptide inhibitors competitively inhibited virus–ACE2 interactions, and demethylase access to significantly inhibit viral replication. Similar to some other predominantly plasma membrane proteins, ACE2 had a novel nuclear function: its cytoplasmic domain harbors a nuclear shuttling domain, which when demethylated by LSD1 promoted importin-α-dependent nuclear ACE2 entry following infection to regulate active transcription. A novel, cell permeable ACE2 peptide inhibitor prevented ACE2 nuclear entry, significantly inhibiting viral replication in SARS-CoV-2-infected cell lines, outperforming other LSD1 inhibitors. These data raise the prospect of post-exposure prophylaxis for SARS-CoV-2, either through repurposed LSD1 inhibitors or new, nuclear-specific ACE2 inhibitors.