KMS, or Key Management Service, plays a critical role in cloud computing by providing a secure way to manage encryption keys used to protect sensitive data. It allows organizations to generate, store, and control access to these keys, ensuring that data remains secure. Using KMS, companies can comply with regulations and protect against data breaches, as it enables them to manage who can access the encryption keys and thus the encrypted data. This is vital for maintaining data integrity and confidentiality in a cloud environment.