The renin-angiotensin system (RAS) plays a pivotal role in mammalian homeostasis physiology. The RAS can be delineated into a classical RAS (the pressor arm) including angiotensinogen (Agt), renin, angiotensin-converting enzyme (ACE), angiotensin II (Ang II) and angiotensin type 1 receptor (AT1R), and a counterbalancing novel RAS (the depressor arm) including Agt, renin, angiotensin-converting enzyme-2 (ACE-2), angiotensin-(1-7) (Ang 1-7) and Ang 1-7 receptor (or Mas receptor (MasR)). Hyperglycemia (diabetes) induces severe tissue oxidative stress, which stimulates the pressor arm of the renal RAS axis and leads to an increase in ACE/ACE-2 ratio, with excessive formation of Ang II. There is a growing body of evidence for beneficial effects of the depressor arm of RAS (ACE-2/Ang 1-7/MasR) axis in diabetes, hypertension and several other diseased conditions. Evidence from in vitro, in vivo and clinical studies reflects anti-oxidant, antifibrotic, and anti-inflammatory properties of Ang 1-7. Most of the currently available therapies only target suppression of the pressor arm of RAS with angiotensin receptor blockers (ARBs) and ACE inhibitors (ACEi). However, it is time to consider simultaneous activation of the depressor arm for more effective outcomes. This review summarizes the recent updates on the protective role of Ang 1-7 in hypertension and kidney injury in diabetes, as well as the possible underlying mechanism(s) of Ang 1-7 action, suggesting that the ACE-2/Ang 1-7/MasR axis can be developed as a therapeutic target for the treatment of diabetes-induced hypertension and renal damage.