Diabetic patients have a high risk of pulmonary disorders that are usually associated with restrictive impairment of lung function, suggesting a fibrotic process (van den Borst B, Gosker HR, Zeegers MP, Schols AM. Chest 138: 393-406, 2010; Ehrlich SF, Quesenberry CP Jr, Van Den Eeden SK, Shan J, Ferrara A. Diabetes Care 33: 55-60, 2010). The present study was undertaken to define whether and how diabetes causes lung fibrosis. Lung samples from streptozotocin-induced type 1 diabetic mice, spontaneously developed type 1 diabetic OVE26 mice, and their age-matched controls were investigated with histopathological and biochemical analysis. Signaling mechanism was investigated with cultured normal human lung fibroblasts in vitro. In both diabetes models, histological examination with Sirius red and hemotoxylin and eosin stains showed fibrosis along with massive inflammatory cell infiltration. The fibrotic and inflammatory processes were confirmed by real-time PCR and Western blotting assays for the increased fibronectin, CTGF, PAI-1, and TNFα mRNA and protein expressions. Diabetes also significantly increased NADPH oxidase (NOX) expression and protein nitration along with upregulation of angiotensin II (Ang II) and its receptor expression. In cell culture, exposure of lung fibroblasts to Ang II increased CTGF expression in a dose- and time-dependent manner, which could be abolished by inhibition of superoxide, NO, and peroxynitrite accumulation. Furthermore, chronic infusion of Ang II to normal mice at a subpressor dose induced diabetes-like lung fibrosis, and Ang II receptor AT1 blocker (losartan) abolished the lung fibrotic and inflammatory responses in diabetic mice. These results suggest that Ang II plays a critical role in diabetic lung fibrosis, which is most likely caused by NOX activation-mediated nitrosative damage.