Background And Objectives: The reninangiotensin system plays a critical role in circulatory homoeostasis. Evidence has emerged that suggests a pathologic role for angiotensin II in patients with kidney disease. Losartan is an antagonist of angiotensin II and blocks the angiotensin II type-1 receptor. Thus it may reduce proteinuria and delay the progression of renal disease in diabetic nephropathy. We investigated the effects of losartan on the mRNA expressions of membrane-type3 matrix metalloproteinases (MT3-MMP) and the tissue inhibitor of metalloproteinase- 2 (TIMP-2) in diabetic kidneys in order to evaluate degradation and remodeling of the extracellular matrix. Methods: Male Wistar rats were divided into 3 groups. Group A was the control group containing healthy rats (n = 11), group B comprised diabetic rats without any therapy (n = 11), and group C consisted of diabetic rats treated with losartan (n = 9). 24-hr urine samples were collected in order to measure urinary albumin excretion (UAE). After a period of 18 weeks, the kidneys were extracted from all rats in order to measure the mRNA expressions of MT3-MMP, TIMP-2 and transforming growth factor-β1 (TGF-β1) by RT-PCR. We also examined the glomerular basement membrane thickening and the mesangial matrix (MM) density (MM area/mesangial area). Results: The expression of renal MT3-MMP mRNA in group B (1.37 ± 0.96) was significantly higher than that in group A (0.75 ± 0.34, p < 0.05), but also significantly higher than in group C (0.75 ± 0.30, p < 0.05). Similarly, the mRNA expression of renal TIMP-2 in group B (0.73 ± 0.37) was significantly increased compared to that in group A (0.32 ± 0.19, p < 0.05), but also higher than in group C (0.34 ± 0.17, p < 0.05). In addition, subjects in group B showed abundant TGF-β1 mRNA expression and UAE compared to groups A and C, as well as significantly higher glomerular basement membrane thickening and MM density (all p < 0.05). Conclusion: We conclude that MT3-MMP and TIMP-2 production in the renal cortex of diabetic kidneys is increased. Losartan can prevent the development of diabetic nephropathy by decreasing MT3-MMP and TIMP2 production in diabetic kidneys.