Alterations in renal function and structure are found even at the onset of diabetes mellitus. Studies performed over the last decade now allow definition of a series of stages in the development of renal changes in diabetes. Such a classification may be useful both in clinical work and in research activities. Stage 1 is characterized by early hyperfunction and hypertrophy. These changes are found at diagnosis, before insulin treatment. Increased urinary albumin excretion, aggravated during physical exercise, is also a characteristic finding. Changes are at least partly reversible by insulin treatment. Stage 2 develops silently over many years and is characterized by morphologic lesions without signs of clinical disease. However, kidney function tests and morphometry on biopsy specimens reveal changes. The function is characterized by increased GFR. During good diabetes control, albumin excretion is normal; however, physical exercise unmasks changes in albuminuria not demonstrable in the resting situation. During poor diabetes control albumin excretion goes up both at rest and during exercise. A number of patients continue in stage 2 throughout their lives. Stage 3, incipient diabetic nephropathy, is the forerunner of overt diabetic nephropathy. Its main manifestation is abnormally elevated urinary albumin excretion, as measured by radioimmunoassay. A level higher than the values found in normal subjects but lower than in clinical disease is the main characteristic of this stage, which appeared to be between 15 and 300 micrograms/min in the baseline situation. A slow, gradual increase over the years is a prominent feature in this very decisive phase of renal disease in diabetes when blood pressure is rising. The increased rate in albumin excretion is higher in patients with increased blood pressure. GFR is still supranormal and antihypertensive treatment in this phase is under investigation, using the physical exercise test. Stage 4 is overt diabetic nephropathy, the classic entity characterized by persistent proteinuria (greater than 0.5 g/24 h). When the associated high blood pressure is left untreated, renal function (GFR) declines, the mean fall rate being around 1 ml/min/mo. Long-term antihypertensive treatment reduces the fall rate by about 60% and thus postpones uremia considerably. Stage 5 is end-stage renal failure with uremia due to diabetic nephropathy. As many as 25% of the population presently entering the end-stage renal failure programs in the United States are diabetic. Diabetic nephropathy and diabetic vasculopathy constitute a major medical problem in society today.