The renin-angiotensin system has been implicated in the development and progression of atherosclerosis, thereby contributing to adverse cardiovascular events. However, its role in diabetic retinopathy remains to be elucidated. Since pericyte loss and dysfunction have been considered as one of the characteristic changes of the early phase of diabetic retinopathy, we investigated the effects of angiotensin II (Ang II) on the growth and function of bovine cultured retinal pericytes. Ang II stimulated intracellular reactive oxygen species (ROS) generation in pericytes in a dose-dependent manner. Telmisartan, a newly developed Ang II type 1 receptor antagonist, completely inhibited ROS generation in pericytes induced by Ang II. Ang II decreased DNA synthesis in pericytes, which was significantly prevented by an antioxidant N-acetylcysteine. Furthermore, telmisartan or N-acetylcysteine were found to completely inhibit the Ang II-induced upregulation of vascular endothelial growth factor messenger RNA levels in pericytes. The present results suggest that Ang II-type 1 receptor interaction could induce pericyte loss and dysfunction through intracellular ROS generation, thus being involved in the development and progression of diabetic retinopathy.