Design This will be a multicenter, Prospective, Randomized, Open label, Blinded End point (PROBE) trial of 3-year treatment with halved doses of benazepril (10 mg/day) and valsartan (160 mg/day) given in combination, or full doses of both benazepril (20 mg/day), or valsartan (320 mg/day) given alone in 102 consenting patients >40 year old, with type 2 diabetes (WHO criteria), serum creatinine >1.8 mg/dl and < 3.5 mg/dl, spot morning urine albumin to creatinine ratio >1000mg/g for the patients without previous ACE inhibitor and ARB therapy and >500mg/g for the patients with previous ACE inhibitor or ARB therapy and no specific contraindications to the study drugs. Primary efficacy variable will be ESRD and primary comparison will be between the benazepril plus valsartan and valsartan alone groups. The analysis will have an 80% power to detect (p=0.05, two-side test) a 50% difference in ESRD incidence.