The hemodynamic and nonhemodynamic effects of angiotensin II on diabetic complications are considered to be primarily mediated by the angiotensin II type 1 receptor subtype. However, its biological and functional effect mediated through the angiotensin II type 2 receptor subtype is still unclear. Activation of the angiotensin II type 2 receptors has been postulated to oppose angiotensin II type 1 receptor-mediated actions and thus attenuate fibrosis. This study aimed to elucidate the reno-protective role of the novel selective angiotensin II type 2 receptor agonist, Compound 21, in an experimental model of type 1 diabetic nephropathy. Compound 21 treatment significantly attenuated diabetes mellitus-induced elevated levels of cystatin C, albuminuria, mesangial expansion, and glomerulosclerosis in diabetic mice. Moreover, Compound 21 markedly inhibited the expression of various proteins implicated in oxidative stress, inflammation, and fibrosis, in association with decreased extracellular matrix production. These findings demonstrate that monotherapy of Compound 21 is protective against the progression of experimental diabetic nephropathy by inhibiting renal oxidative stress, inflammation, and fibrosis.