Inhibition of the renin angiotensin aldosterone system (RAAS) produces protective effects on cardio-renal injury in type 2 diabetes. Vasopeptidase inhibitors (VPI) represent a new pharmacological tool, acting by simultaneous inhibition of the RAAS and neutral endopeptidase. We examined the effects of chronic VPI on renal function and morphology in experimental type 2 diabetes as compared to angiotensin converting enzyme inhibition (ACE-I). Zucker diabetic fatty rats aged 13 weeks were treated with either VPI (AVE7688, ZDF-VPI, n = 8) or ACE-I (Ramipril, ZDF-ACE-I, n = 7) or placebo (ZDF, n = 8). Heterozygous rats served as non-diabetic controls (Ctr, n = 8). Both treatments led to a similar decrease in blood pressure. After 10 weeks of treatment, ZDF developed marked albuminuria. The latter was significantly attenuated in ZDF-VPI as compared to ZDF and ZDF-ACE-I. Renal histology revealed a significant expansion in the glomerular tuft area in all ZDF groups. However, expression of glomerular desmin, which has been recognized as a sensitive marker of early podocyte damage, was significantly increased in ZDF as compared to Ctr. Desmin was reduced in ZDF-VPI but not in animals treated with ACE-I. There was a correlation between albumin excretion and desmin-positive glomerular area. In experimental type 2 diabetes, albuminuria correlates to podocyte damage. These hallmarks of diabetic nephropathy are attenuated by VPI to a greater extent than by ACE-I alone. These findings suggest that podocyte damage is an early critical step in the progression of diabetic nephropathy, and that VPI is a promising pharmacological tool in the treatment of diabetic renal disease.