BACKGROUND The prevalence of abnormally elevated urinary albumin excretion rate (> 30 mg/24 h) is approximately 40% in insulin-dependent and in non-insulin-dependent diabetic patients. Diabetes has become the leading cause of end-stage renal failure in Europe, USA and Japan. Approximately 90% of the direct and indirect costs of caring for diabetic patients are spent on the complications of diabetes. METHODS Identification of patients at high risk of developing diabetic nephropathy is possible by screening for microalbuminuria (30-300 mg/24 h). Additional risk factors/ markers for development of nephropathy are male sex, genetic predisposition, ethnic conditions, early onset of diabetes, poor metabolic control, hyperfiltration, elevated prorenin and smoking. Elevated urinary albumin excretion rate indicates a substantially increased cardiovascular morbidity and mortality risk in diabetic patients. Randomized controlled trials in normotensive insulin-dependent and in non-insulin-dependent diabetic patients with persistent microalbuminuria indicate that angiotensin converting enzyme (ACE) inhibitors diminish urinary albumin excretion rate, and postpone and may even prevent progression to clinical overt nephropathy. These findings indicate that screening and intervention programs could probably save lives and lead to considerable economic savings. Systemic blood pressure elevation to a hypertensive level is an early and frequent phenomenon in diabetic nephropathy. Furthermore, nocturnal blood pressure elevation (non-dippers) occurs more frequently in patients with nephropathy. Systemic blood pressure elevation, hyperglycaemia, albuminuria and the D polymorphism in the ACE gene accelerate the progression of diabetic nephropathy. Studies of the impact of other potential progression promoters (i.e. smoking, hyperlipidaemia and protein intake) have yielded conflicting results. Effective blood pressure reduction using ACE inhibitors or drugs of other classes, or both, frequently in combination with diuretics reduces albuminuria, delays the progression of nephropathy, postpones renal failure and improves survival in patients with diabetic nephropathy. Antihypertensive treatment for diabetic nephropathy extends life and saves money.