Microangiopathy characterizes both diabetic retinopathy and nephropathy. It is currently unclear which diabetic subjects should be treated with angiotensin-converting enzyme (ACE) inhibitors. A double-blind, placebo-controlled protocol was implemented using captopril to treat subjects with Type I diabetes, early diabetic nephropathy (albumin excretion rates, 20-200 micrograms/min), and normal blood pressures. After two years, the final eye grades were improved in two treated subjects but not in any of the controls. Three control and one treated subject showed worsening of their eye grade after two years (P < .001, by chi-square test). Significant differences in renal albumin excretion were not seen between the two groups. The distribution of changes in retinal grades in the treatment group compared with the placebo group was improved after two years. Studies of larger numbers of patients will be necessary to determine if ACE inhibitors should be used routinely in subjects with diabetic retinopathy and to determine which subjects are most likely to respond.