We evaluated the hypothesis that activation of endogenous angiotensin-converting enzyme (ACE) 2 would improve cardiac dysfunction induced by diabetes. Ten days after diabetes induction (streptozotocin, 50 mg/kg, i.v.), male Wistar rats were treated with the ACE2 activator 1-[[2-(dimethylamino)ethyl]amino]-4-(hydroxymethyl)-7-[[(4-methylphenyl)sulfonyl]oxy]-9H-xanthen-9-one (XNT, 1 mg/kg/day, gavage) or saline (control) for 30 days. Echocardiography was performed to analyze the cardiac function and kinetic fluorogenic assays were used to determine cardiac ACE and ACE2 activities. Cardiac ACE2, ACE, Mas receptor, AT(1) receptor, AT(2) receptor and collagen types I and III mRNA and ACE2, ACE, Mas, AT(1) receptor, AT(2) receptor, ERK1/2, Akt, AMPK-α and AMPK-β(1) protein were measured by qRT-PCR and western blotting techniques, respectively. Histological sections of hearts were analyzed to evaluate the presence of hypertrophy and fibrosis. Diabetic animals presented hyperglycemia and diastolic dysfunction along with cardiac hypertrophy and fibrosis. XNT treatment prevented further increase in glycemia and improved the cardiac function, as well as the hypertrophy and fibrosis. These effects were associated with increases in cardiac ACE2/ACE ratios (activity: ~26%; mRNA: ~113%; and protein: ~188%) and with a decrease in AT(1) receptor expression. Additionally, XNT inhibited ERK1/2 phosphorylation and prevented changes in AMPK-α and AMPK-β(1) expressions. XNT treatment did not induce any significant change in AT(2) receptor and Akt expression. These results indicate that activation of intrinsic cardiac ACE2 by oral XNT treatment protects the heart against diabetes-induced dysfunction through mechanisms involving ACE, ACE2, ERK1/2, AMPK-α and AMPK-β(1) modulations.