Urotensin-II (U-II) is a cyclic peptide that acts through a specific G-protein-coupled receptor, UT receptor. Urotensin-II and UT receptors have been described in pancreas and kidney, but their function is not well understood. We studied the effects of chronic treatment of diabetic rats with the orally active selective U-II receptor antagonist palosuran. Streptozotocin treatment causes pancreatic beta-cell destruction and leads to the development of hyperglycemia, dyslipidemia, and renal dysfunction. Long-term treatment of streptozotocin-induced diabetic rats with palosuran improved survival, increased insulin, and slowed the increase in glycemia, glycosylated hemoglobin, and serum lipids. Furthermore, palosuran increased renal blood flow and delayed the development of proteinuria and renal damage. The U-II system is unique in that it plays a role both in insulin secretion and in the renal complications of diabetes. Urotensin receptor antagonism might be a new therapeutic approach for the treatment of diabetes.