Monoclonal antibodies targeting the SARS-CoV-2 spike (S) glycoprotein neutralize infection and are efficacious for the treatment of mild-to-moderate COVID-19. However, SARS-CoV-2 variants have emerged that partially or fully escape monoclonal antibodies in clinical use. Notably, the BA.2 sublineage of B.1.1.529/omicron escapes nearly all monoclonal antibodies currently authorized for therapeutic treatment of COVID-19. Decoy receptors, which are based on soluble forms of the host entry receptor ACE2, are an alternative strategy that broadly bind and block S from SARS-CoV-2 variants and related betacoronaviruses. The high-affinity and catalytically active decoy sACE2 2 .v2.4-IgG1 was previously shown to be effective in vivo against SARS-CoV-2 variants when administered intravenously. Here, the inhalation of sACE2 2 .v2.4-IgG1 is found to increase survival and ameliorate lung injury in K18-hACE2 transgenic mice inoculated with a lethal dose of the virulent P.1/gamma virus. Loss of catalytic activity reduced the decoy’s therapeutic efficacy supporting dual mechanisms of action: direct blocking of viral S and turnover of ACE2 substrates associated with lung injury and inflammation. Binding of sACE2 2 .v2.4-IgG1 remained tight to S of BA.1 omicron, despite BA.1 omicron having extensive mutations, and binding exceeded that of four monoclonal antibodies approved for clinical use. BA.1 pseudovirus and authentic virus were neutralized at picomolar concentrations. Finally, tight binding was maintained against S from the BA.2 omicron sublineage, which differs from S of BA.1 by 26 mutations. Overall, the therapeutic potential of sACE2 2 .v2.4-IgG1 is further confirmed by inhalation route and broad neutralization potency persists against increasingly divergent SARS-CoV-2 variants.