The currently available therapies for diabetic nephropathy, one of the leading causes of renal failure globally are based on inhibition of renin angiotensin system. However, recently, the focus has shifted towards activation of its protective arm rather than the inhibition of deteriorative axis, using specific agonists. Compound 21 (C21), a novel non-peptide Angiotensin II type 2 receptor (AT2) agonist, recently granted orphan drug status for the treatment of a rare disease, idiopathic pulmonary fibrosis has also shown a potent anti-inflammatory, anti-fibrotic, antioxidant and anti-apoptotic potential in various diseases including heart failure, myocardial infarction, chronic inflammatory diseases, and neurological diseases such as ischemic stroke. A pool of evidences suggest that C21, either alone or in combination with angiotensin receptor blockers could be extremely beneficial in the treatment of diabetic nephropathy, a chronic inflammatory condition sharing its pathogenesis with aforementioned diseases. The review analyses the new therapeutic tool, C21, its mechanisms of action for renoprotection in diabetic nephropathy, and its future perspectives and thereby provides an insight into the potential application of C21 as a novel therapeutic tool in the eradication of diabetic nephropathy.