Heart failure (HF) is an increasingly recognized complication of diabetes. Cardiac fibrosis is an important causative mechanism of HF associated with diabetes. Recent data indicate that inflammation may be particularly important in the pathogenesis of cardiovascular fibrosis. We sought to determine the mechanism by which cardiac fibrosis develops and to specifically investigate the role of the CXCR4 axis in this process. Animals with type I diabetes (streptozotocin treated mice) or type II diabetes (Israeli Sand-rats) and controls were randomized to treatment with a CXCR4 antagonist, candesartan or vehicle control. Additional groups of mice also underwent bone marrow transplantation (GFP+ donor marrow) to investigate the potential role of bone marrow derived cell mobilization in the pathogenesis of cardiac fibrosis. Both type I and II models of diabetes were accompanied by the development of significant cardiac fibrosis. CXCR4 antagonism markedly reduced cardiac fibrosis in both models of diabetes, similar in magnitude to that seen with candesartan. In contrast to candesartan, the anti-fibrotic actions of CXCR4 antagonism occurred in a blood pressure independent manner. Whilst the induction of diabetes did not increase the overall myocardial burden of GFP+ cells, it was accompanied by an increase in GFP+ cells expressing the fibroblast marker alpha-smooth muscle actin and this was attenuated by CXCR4 antagonism. CXCR4 antagonism was also accompanied by increased levels of circulating regulatory T cells. Taken together the current data indicate that pharmacological inhibition of CXCR4 significantly reduces diabetes induced cardiac fibrosis, providing a potentially important therapeutic approach.