The incidence of end-stage renal disease (ESRD) owing to diabetes has continued to increase despite the extensive use of angiotensin-converting enzyme (ACE) inhibitors to prevent diabetic nephropathy, primarily from evidence of short-term effectiveness. We assessed the long-term effect of ACE inhibitors on the risk of ESRD. We formed a population-based cohort of all diabetic patients treated with antihypertensive drugs in the Province of Saskatchewan, Canada, between 1982 and 1986. The patients were followed up to the end of 1997 to identify cases of end-stage renal failure. A nested case-control analysis was used with the controls matched to each case on age, diabetes type, and duration of follow-up. The cohort comprised 6102 subjects, of which the 102 cases who developed end-stage renal failure were matched to 4129 controls. Relative to thiazide diuretic use, the adjusted rate ratio of end-stage renal failure associated with the use of ACE inhibitors was 2.5 (95% confidence interval 1.3-4.7), whereas it was 0.8 (95% confidence interval 0.5-1.4) for beta-blockers and 0.7 (95% confidence interval 0.4-1.3) for calcium antagonists. The rate ratio of end-stage renal failure with the use of ACE inhibitors was 0.8 (95% confidence interval 0.3-2.5) during the first 3 years of follow-up, but increased to 4.2 (95% confidence interval 2.0-9.0) after 3 years. ACE-inhibitor use does not appear to decrease the long-term risk of end-stage renal failure in diabetes. Our data suggest instead that ACE inhibitors might actually increase this risk, which may possibly contribute to the continued increasing incidence of ESRD owing to diabetes.