Angiotensin-converting enzyme 2 (ACE2), an important component of the renin-angiotensin system, protects against renal tubulointerstitial fibrosis, but its level of involvement in the mechanism of diabetic nephropathy (DN) currently remains unclear. Herein, the effects of ACE2 in DN and the associated mechanisms were investigated using serum and renal biopsy specimens from patients with DN and control participants, and human renal proximal tubular epithelial cells (HRPTEpiCs). The present study determined that the circulating concentration of ACE2 was high, but renal ACE2 expression was markedly lower, and there was abundant expression of Arkadia, an E3 ubiquitin ligase, in patients with DN. In vitro, ACE2 attenuated high-glucose-induced tubular epithelial to mesenchymal cell transition (EMT), which was demonstrated by increased expression of alpha -SMA and loss of E-cadherin expression, as demonstrated by western blot analysis and reverse transcription-quantitative PCR. Adenovirus-mediated ACE2 overexpression was also revealed to significantly inhibit Arkadia expression and alleviated high-glucose-induced EMT, while ACE2 inhibition had the opposite effects. Furthermore, western blot analysis demonstrated that ACE2-alleviated EMT was associated with downregulated Arkadia and increased SMAD family member 7 (Smad7) protein, followed by TGF-beta /Smad pathway inhibition in HRPTEpiCs. In conclusion, ACE2 is protective in DN, which may be due to the inhibition of Arkadia-mediated Smad7 degradation, whereby TGF-beta /Smad-mediated EMT is ameliorated in high-glucose-stimulated HRPTEpiCs.