To elucidate the role of the renin–angiotensin system (RAS) in diabetic nephropathy, we examined the association between diabetic nephropathy in a large cohort of Japanese type 2 diabetic patients and polymorphisms within the genes that encode angiotensin-converting enzyme (ACE), angiotensinogen (AGT) and angiotensin II receptor type 1 (AGTR1). Single nucleotide polymorphisms (SNPs) within these genes were genotyped using invader assay in 747 nephropathy cases and 557 control subjects. Eight SNPs within the ACE gene were significantly associated with diabetic nephropathy (P<0.05), including five SNPs in almost complete linkage disequilibrium to the insertion/deletion polymorphism in the 16th intron (P=0.01, odds ratio =1.34, 95% CI 1.07–1.69). Three SNPs within the AGT, including M235T and one SNP in the AGTR1, were also significantly associated with nephropathy (M235T P=0.01, odds ratio =0.74, 95% CI 0.59–0.94). In addition, we found that the allelic mRNA expression corresponding to the 235M allele was significantly higher than that for the 235T allele in normal kidney tissues. Furthermore, we found a significant additional effect of these three genes by a step-wise logistic regression analysis (final empirical P value =0.00005). We concluded that RAS gene polymorphisms may contribute to the susceptibility to diabetic nephropathy in type 2 diabetes.