Matrix metalloproteinases have been implicated in diabetic microvascular complications. However, little is known about the pathophysiological links between MMP-10 and the renin-angiotensin system (RAS) in diabetic kidney disease (DKD). We tested the hypothesis that MMP-10 may be up-regulated in early stage DKD, and could be down-regulated by angiotensin II receptor blockade (telmisartan). Serum MMP-10 and TIMP-1 levels were measured in 268 type 2 diabetic subjects and 111 controls. Furthermore, histological and molecular analyses were performed to evaluate the renal expression of Mmp10 and Timp1 in a murine model of early type 2 DKD (db/db) after telmisartan treatment. MMP-10 (473 ± 274 pg/ml vs. 332 ± 151; p = 0.02) and TIMP-1 (573 ± 296 ng/ml vs. 375 ± 317; p < 0.001) levels were significantly increased in diabetic patients as compared to controls. An early increase in MMP-10 and TIMP-1 was observed and a further progressive elevation was found as DKD progressed to end-stage renal disease. Diabetic mice had 4-fold greater glomerular Mmp10 expression and significant albuminuria compared to wild-type, which was prevented by telmisartan. MMP-10 and TIMP-1 are increased from the early stages of type 2 diabetes. Prevention of MMP-10 upregulation observed in diabetic mice could be another protective mechanism of RAS blockade in DKD.