Background: Diabetes nephropathy is one of the most common causes of end-stage renal failure. Inhibition of ACE2 function exacerbates diabetic kidney injury while renal ACE2 is downregulated in diabetic nephropathy. We hypothesize that recombinant human ACE2 (rhACE2) will slow the progression of diabetic kidney injury. Methods and Results: Male 12-week old diabetic Akita mice ( Ins2 WT/C96Y ) and controls ( Ins2 WT/WT ) were injected daily with rhACE2 (2 mg/kg, i.p.) or placebo for four consecutive weeks. In Akita Ins2 WT/C96Y mice injected with hrACE2, plasma ACE2 activity showed a marked increase resulting in significant reduction in urinary albumin excretion (118±21 vs 224±16 μ g/24 hrs; n=6~8; p<0.05). Treatment with rhACE2 decreased renal cortical angiotensin (Ang) II (12.1±1.9 vs 22.4±3.2 pg/mg; p<0.05) and increased Ang (1–7) (14.2±2.1 vs 8.8±1.9 pg/mg; p<0.05) levels, respectively, independent of changes in the expression of Ace and Ace2 while NADPH oxidase activity in renal cortical tissue from Akita mice was reduced by treatment with rhACE2 (364±45 vs 1720±277 RLU/sec/mg protein; n=6, p<0.05). These effects resulted in normalization of the increased extracellular matrix gene expression ( α -smooth muscle actin, collagen III and fibronectin), reduction in glomerular volume and basement membrane thickness in the diabetic Akita mice. Activation of protein kinase C (PKC)á and PKCâ was reduced by 60 –70% in Akita diabetic mice treated with rhACE2. Ang II and high glucose-induced reactive oxygen species generation was evaluated using lucigenin-based NADPH oxidase activity and DHE fluorescence in cultured rat mesangial cells was suppressed by 25 and 250 ng/ml of rhACE2 in a dose-dependent manner. The mild hypertension in Akita Ins2 WT/C96Y mice was normalized by treatment with rhACE2 (122.3±2.1 vs 108.4±1.9 mmHg; n=6, p<0.05) while the beneficial effects seen with rhACE2 occurred in the absence of hyperkalemia or acute renal failure and without a differential impact on hyperglycemia in the Akita diabetic model. Conclusions: We conclude that biologic antagonism of the RAS using rhACE2 can slow the progression of diabetic kidney injury and ACE2 may prove to be a useful adjunctive therapy for diabetic kidney disease.