Diabetic nephropathy is the most common cause of end-stage renal failure in the Western world. It accounts for 15-25% of all renal failure in patients requiring chronic dialysis. About 20% of patients with insulin-dependent diabetes and less than 15% of patients with non-insulin-dependent diabetes develop clinically significant nephropathy. The prevalence of diabetic nephropathy in pregnant patients with insulin-dependent diabetes is estimated to be 6%. Angiotensin converting enzyme (ACE) inhibitors are the drug of choice in treating women with diabetic nephropathy. In addition, many of these drugs may be started before conception. Unfortunately, these agents might be fetotoxic when taken during pregnancy. This article reviews the epidemiology and natural history of diabetic nephropathy, discusses the renoprotective effect of ACE inhibitors, reviews the effect of ACE inhibitors on fetomaternal outcome when used prior to and during pregnancy in women with diabetic nephropathy and discusses the new class of drugs, angiotensin II receptor antagonists, in the management of diabetics who have or are prone to developing diabetic nephropathy.