Diabetic nephropathy has been the cause of lot of morbidity and mortality in the diabetic population. The renin angiotensin system (RAS) is considered to be involved in most of the pathological processes that result in diabetic nephropathy. This system has various subsystems which contribute to the disease pathology. One of these involves angiotensin II (Ang II) which shows increased activity during diabetic nephropathy. This causes hypertrophy of various renal cells and has a pressor effect on arteriolar smooth muscle resulting in increased vascular pressure. Ang II also induces inflammation, apoptosis, cell growth, migration and differentiation. Monocyte chemoattractant protein-1 production responsible for renal fibrosis is also regulated by RAS. Polymorphism of angiotensin converting enzyme (ACE) and Angiotensinogen has been shown to have effects on RAS. Available treatment modalities have proven effective in controlling the progression of nephropathy. Various drugs (based on antagonism of RAS) are currently in the market and others are still under trial. Amongst the approved drugs, ACE inhibitors and angiotensin receptor blockers (ARBs) are widely used in clinical practice. ARBs are shown to be superior to ACE inhibitors in terms of reducing proteinuria but the combined role of ARBs with ACE inhibitors in diabetic nephropathy is under debate.