In diabetes mellitus (DM), the circulating renin-angiotensin system (RAS) is suppressed, but the renal tissue RAS is activated. Hyperglycemia increases tissue angiotensin II (Ang II), which induces oxidative stress, endothelial damage and disease pathology including vasoconstriction, thrombosis, inflammation and vascular remodeling. In early DM, the type 1 Ang II (AT(1)) receptor is upregulated but the type 2 Ang II (AT(2)) receptor is downregulated. This imbalance can predispose the individual to tissue damage. Hyperglycemia also increases the production of aldosterone, which has an unknown contribution to tissue damage. The insulin resistance state is associated with upregulation of the AT(1) receptor and an increase in oxygen free radicals in endothelial tissue caused by activation of NAD(P)H oxidase. Treatment with an AT(1) receptor blocker normalizes oxidase activity and improves endothelial function. An understanding of the tissue renin-angiotensin-aldosterone system, which is a crucial factor in the progression of tissue damage in DM, is imperative for protection against tissue damage in this chronic disease.