The occurrence of a functional intracellular renin-angiotensin system (RAS) has emerged as a new paradigm. Recently, we and others demonstrated intracellular synthesis of ANG II in cardiac myocytes and vascular smooth muscle cells that was dramatically stimulated in high glucose conditions. Cardiac fibroblasts significantly contribute to diabetes-induced diastolic dysfunction. The objective of the present study was to determine the existence of the intracellular RAS in cardiac fibroblasts and its role in extracellular matrix deposition. Neonatal rat ventricular fibroblasts were serum starved and exposed to isoproterenol or high glucose in the absence or presence of candesartan, which was used to prevent receptor-mediated uptake of ANG II. Under these conditions, an increase in ANG II levels in the cell lysate represented intracellular synthesis. Both isoproterenol and high glucose significantly increased intracellular ANG II levels. Confocal microscopy revealed perinuclear and nuclear distribution of intracellular ANG II. Consistent with intracellular synthesis, Western analysis showed increased intracellular levels of renin following stimulation with isoproterenol and high glucose. ANG II synthesis was catalyzed by renin and angiotensin-converting enzyme (ACE), but not chymase, as determined using specific inhibitors. High glucose resulted in increased transforming growth factor-beta and collagen-1 synthesis by cardiac fibroblasts that was partially inhibited by candesartan but completely prevented by renin and ACE inhibitors. In conclusion, cardiac fibroblasts contain a functional intracellular RAS that participates in extracellular matrix formation in high glucose conditions, an observation that may be helpful in developing an appropriate therapeutic strategy in diabetic conditions.