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 1020 consenting patients >40 year old, with type 2 diabetes (WHO criteria), serum creatinine <1.5 mg/dl, high-normal albuminuria (UAE >7 and <20 µg/min in at least 2 of 3 overnight urine collections), and no specific contraindications to the study drugs. Primary outcome variable will be microalbuminuria (UAE > 20µg /min in at least 2 of 3 overnight urine collections in two consecutive visits 2 months apart) and primary comparison will be between the combined benazepril plus valsartan and the benazepril alone groups. The analysis will have an 80% power to detect (p=0.05, two-side test) a 40% difference in the incidence of microalbuminuria.