As severe acute respiratory syndrome coronavirus-2 (SARS-CoV-2) evolves to escape natural antibodies, it also loses sensitivity to therapeutic antibody drugs. By contrast, evolution selects for binding to ACE2, the cell-surface receptor required for SARS-CoV-2 infection. Consistent with this, we find that an ACE2 decoy neutralizes antibody-resistant variants, including Omicron, with no loss in potency. To identify design features necessary for in vivo activity, we compare several enzymatically inactive, Fc effector-silenced ACE2-Fc decoys. Inclusion of the ACE2 collectrin-like domain not only improves affinity for the S protein but also unexpectedly extends serum half-life and is necessary to reduce disease severity and viral titer in Syrian hamsters. Fc effector function is not required. The activity of ACE2 decoy receptors is due, in part, to their ability to trigger an irreversible structural change in the viral S protein. Our studies provide a new understanding of how ACE2 decoys function and support their development as therapeutics to treat ACE2-dependent coronaviruses.