To explore the potential therapeutic effects of angiotensin(1-7) (Ang(1-7)), an endogenous ligand of the Mas receptor, on streptozotocin-induced diabetic nephropathy, male Wistar rats were randomly divided into two groups: a control group and a diabetic model group. After 12 weeks, the diabetic rats were divided into subgroups for 4-week treatments consisting of no-treatment group, small-, moderate-, and large-dose Ang(1-7) groups, a valsartan group, a large-dose Ang(1-7) plus valsartan group, and an A779 (antagonist of the Mas receptor) group, each with 15 rats. Ang(1-7) improved renal function, attenuated glomeruli sclerosis, oxidative stress, and cell proliferation, decreased the expression of collagen IV, TGF-β1, VEGF, NOX4, p47phox, PKCα, and PKCβ1, and the phosphorylation of Smad3. In the rat mesangial HBZY-1 cell line, Ang(1-7) decreased high-glucose-induced oxidative stress, the proliferation and expression of NOX4, p47phox, and TGF-β1, the phosphorylation of Smad3, collagen IV, and VEGF, and the membrane translocation of PKCα and PKCβ1. A779 blocked the effects of Ang(1-7) both in vivo and in vitro. The effects of large-dose Ang(1-7) alone and in combination with valsartan were superior to valsartan alone, but the combination had no significant synergistic effect compared with Ang(1-7) alone. Thus, Ang(1-7) ameliorated streptozotocin-induced diabetic renal injury. Large-dose treatment was superior to valsartan in reducing oxidative stress and inhibiting TGFβ1/Smad3- and VEGF-mediated pathways.