Diabetes mellitus increases the risk for hypertension and associated cardiovascular diseases, including coronary, cerebrovascular, renal and peripheral vascular disease. The risk for developing cardiovascular disease is increased when both diabetes and hypertension co-exist; in fact, over 11 million Americans have both diabetes and hypertension. These numbers will continue to climb, internationally, since the leading associated risk for diabetes development, obesity, has reached epidemic proportions, globally. Moreover, the frequent association of diabetes with dyslipidemia, as well as coagulation, endothelial, and metabolic abnormalities also aggravates the underlying vascular disease process in patients who possess these comorbid conditions. The renin-angiotensin-aldosterone system (RAS) and arginine vasopressin (AVP) are overactivated in both hypertension and diabetes. Drugs that inhibit this system, such as ACE inhibitors and more recently angiotensin receptor antagonists (ARBs), have proven beneficial effects on the micro- and macrovascular complications of diabetes, especially the kidney. The BRILLIANT study showed that lisinopril reduces microalbuminuria better than CCB therapy. Numerous other long-term studies confirm this association with ACE inhibitors including the HOPE trial. Furthermore, the European Controlled trial of Lisinopril in Insulin-dependent Diabetes (EUCLID) study, showed that lisinopril slowed the progression of renal disease, even in individuals with mild albuminuria. In fact, there are now five appropriately powered randomized placebo-controlled trials to show that both ACE inhibitors and ARBs slow progression of diabetic nephropathy in people with type 2 diabetes. These effects were shown to be better than conventional blood pressure lowering therapy, including dihydropyridine CCBs. In patients with microalbuminuria, ACE inhibitors and ARBs reduce the progression of microalbuminuria to proteinuria and provide a risk reduction of between 38 and 60% for progression to proteinuria. This is important since microalbuminuria is known to be associated with increased vascular permeability and decreased responsiveness to vasodilatory stimuli. Recently, increased AVP levels have been lined to microalbuminuria and hyperfiltration in diabetes. The microvascular and macrovascular benefits of ACE inhibition, ARBs and possible role of AVP antagonists in diabetic patients will be discussed, as will be recommendations for its clinical use.