Diabetes is associated with increased production of 12(S)-hydroxyeicosatetraenoic acid [12(S)-HETE]. The mechanisms involved in this process remain unclear. We hypothesized that hyperglycemia and angiotensin II (ANG II) regulate renal 12(S)-HETE production via a balance between angiotensin AT(1) and AT(2) receptors activities. Using a microdialysis technique, renal interstitial fluid (RIF) levels of ANG II and 12(S)-HETE were monitored in normal control and streptozotocin-induced diabetic rats at baseline and then weekly thereafter for 12 wk. In a second group of normal and diabetic rats, 3 wk after development of diabetes, we monitored RIF 12(S)-HETE levels in response to acute AT(1) receptor blockade with valsartan or AT(2) receptor blockade with PD123319 individually or combined. Two weeks after induction of diabetes there was a 404% increase in ANG II (P < 0.05), a 149% increase in 12S-HETE (P < 0.05), and a 649% increase in urinary albumin excretion (P < 0.05). These levels remained elevated throughout the study. PD123319 given alone had no effect on 12(S)-HETE. Valsartan decreased 12(S)-HETE by 61.6% (P < 0.0001), a response that was abrogated when PD123319 was given with valsartan. These data demonstrate that hyperglycemia increases renal ANG II and 12(S)-HETE levels. The increase in 12(S)-HETE is mediated via AT(1) receptor. The attenuation of the effects of AT(1) receptor blockade by PD123319 suggests that AT(2) receptor contributes to the downregulation of renal 12(S)-HETE production.