The system starts with a loss of blood (such as in a haemorrhage). When arterial blood pressure or blood volume decreases, the perfusion of the juxtaglomerular apparatus in the kidneys becomes weaker.
This causes cells in the kidneys to release the enzyme renin. Renin cleaves an inactive peptide called angiotensinogen, converting it into angiotensin I. Angiotensin I may have some minor activity, but angiotensin II is more active.
Angiotensin I is converted to angiotensin II by the angiotensin converting enzyme (ACE). Some blood pressure medications (ACE inhibitors) inhibit this enzyme to lower blood pressure.
Angiotensin II has a variety of effects on the body. It is a potent vasoconstrictor, causing blood vessels to narrow in size. It acts on the central nervous system to increase a persons appetite for salt, and to make them feel thirsty. These effects directly act to increase the amount of fluid in the blood, to make up for a loss.