This study was conducted to determine the role of Serum Angiotensin Converting Enzyme (SACE) as a marker in the differential diagnosis of pulmonary diseases and prognosis of sarcoidosis, A retrospective analysis of 113 medical records of patients at The Aga Khan University Hospital, with laboratory investigation for SACE was performed. Among 113 patients, 51 cases were found to have sarcoidosis, 44 of them had SACE levels greater than 52 lU/L (mean ACE 104.44). SACE levels were also found elevated in other clinical conditions like tuberculosis (mean 58.64 lUlL), but the enzyme level were less (p0.04) than those found in sarcoidosis (mean (92-97 lUlL). SACE activity was found to be considerably lower in other chronic lung diseases such as, fibrosing alveolitis (mean 43.98 lUlL), interstitial lung disease (mean 42.11 lU/L) and chronic obstructive lung disease (mean 40.85 lUlL). Twenty patients of sarcoidosis, who received steroid tretalment subsequently showed a decline in the SACE levels. SACE is a useful marker in differential diagnosis as 37.2% cases of sarcoidosis compared to only 9.09% of tuberculosis had SACE levels greater than 100 lUlL. In addition, our data also suggest that serum ACE is useful for the diagnosis as well as monitoring prognosis in sarcoidosis (JPMA 48:131,1998).