The reduced expression of angiotensin-converting enzyme (ACE) 2 in the kidneys of animal models and patients with diabetes suggests ACE2 involvement in diabetic nephrology. To explore the renoprotective effects of ACE2 overexpression, ACE inhibition (ACEI) or both on diabetic nephropathy and the potential mechanisms involved, 50 Wistar rats were randomly divided into a normal group that received an injection of sodium citrate buffer and a diabetic model group that received an injection of 60 mg/kg streptozotocin. Eight wks after streptozotocin injection, the diabetic rats were divided into no treatment group, adenoviral (Ad)-ACE2 group, Ad-green flurescent protein (GFP) group, ACEI group receiving benazepril and Ad-ACE2 + ACEI group. Four wks after treatment, physical, biochemical, and renal functional and morphological parameters were measured. An experiment in cultured glomerular mesangial cells was performed to examine the effects of ACE2 on cellular proliferation, oxidative stress and collagen IV synthesis. In comparison with the Ad-GFP group, the Ad-ACE2 group exhibited reduced systolic blood pressure, urinary albumin excretion, creatinine clearance, glomeruli sclerosis index and renal malondialdehyde level; downregulated transforming growth factor (TGF)-β1, vascular endothelial growth factor (VEGF) and collagen IV protein expression; and increased renal superoxide dismutase activity. Ad-ACE2 and ACEI had similar effects, whereas combined use of Ad-ACE2 and ACEI offered no additional benefits. ACE2 transfection attenuated angiotensin (Ang) II-induced glomerular mesangial cell proliferation, oxidative stress and collagen IV protein synthesis. In conclusion, ACE2 exerts a renoprotective effect similar to that of ACEI treatment. Decreased renal Ang II, increased renal Ang-(1-7) levels, and inhibited oxidative stress were the possible mechanisms involved.