The renin-angiotensin system (RAS) has an important role in the endocrine pancreas. Although angiotensin II has significant effects on cell proliferation and apoptosis, the contribution of the RAS to changes in islet structure and function associated with type 2 diabetes is yet to be defined. This study examined the specific effects of RAS blockade on islet structure and function in diabetes. Thirty-six male Zucker diabetic fatty (ZDF) rats, 10 weeks of age, were randomized to receive the angiotensin-converting enzyme inhibitor perindopril (8 mg/1 in drinking water; n = 12), irbesartan (15 mg/kg via gavage; n = 12), or no treatment (n = 12) for 10 weeks. Results were compared with lean littermates (ZL) (n = 12) studied concurrently. ZDF rats had increased intraislet expression of components of the RAS correlating with increased intraislet fibrosis, apoptosis, and oxidative stress. Disordered islet architecture, seen in ZDF rats, was attenuated after treatment with perindopril or irbesartan. Islet fibrogenesis was also diminished, as measured by picrosirius staining and expression of collagens I and IV. Gene expression of transforming growth factor-β1 was increased in the ZDF pancreas (ZL, 1. 0 ± 0.1; ZDF, 2.0 ± 0.3; P < 0.05) and reduced after blockade of the RAS (ZDF + P, 1.3 ± 0.2; ZDF + I, 1.5 ± 0.1; vs. ZDF, both P < 0.05). Improvements in structural parameters were also associated with functional improvements in first-phase insulin secretion. These findings provide a possible mechanism for the reduced incidence of new-onset diabetes that has been observed in clinical trials of RAS blockade.