Angiotensin II (Ang II) can up-regulate nicotinamide adenine dinucleotide phosphate [NAD(P)H] oxidase, whose product superoxide anion (O2-) can interact with nitric oxide (NO) to form peroxynitrite (ONOO-). We tested the hypothesis that Ang II subtype 1 (AT1) receptor activation enhances oxidative stress and nitrotyrosine deposition in the kidneys of rats with diabetes mellitus (DM). After two weeks of streptozotocin-induced DM, rats received either no treatment, an angiotensin-converting enzyme inhibitor (ACEI) or an angiotensin receptor blocker (ARB) for two weeks. At four weeks, renal expression of the p47phox component of NAD(P)H oxidase, endothelial nitric oxide synthase (eNOS), neuronal nitric oxide synthase (nNOS), and nitrotyrosine were evaluated by Western blot and immunohistochemistry and related to plasma lipid peroxidation products (LPO), hydrogen peroxide production in the kidney and 24-hour protein excretion. Immunoreactive expression of p47phox and eNOS were increased in DM with an increase in plasma LPO, renal hydrogen peroxide production and nitrotyrosine deposition. Expression of nNOS was unaltered. Treatment with either ACEI or ARB prevented all these findings and also prevented significant microalbuminuria. The treatments did not affect the elevated blood sugar, nor did DM or its treatment affect the blood pressure or the creatinine clearance. Early proteinuric diabetic nephropathy increases renal expression of the p47phox component of NAD(P)H oxidase and eNOS with increased indices of systemic and renal oxidative/nitrosative stress. An ACEI or an ARB prevents these changes and prevents the development of proteinuria, independent of blood pressure or blood sugar. This finding indicates a pathogenic role for AT1 receptors in the development of oxidative damage in the kidneys during early DM.