Diabetic retinopathy is the leading cause of new blindness in the working-age population. If improved treatment regimens are to be developed it is crucial that the underlying pathophysiological mechanisms responsible for diabetic retinopathy are better understood. The multifactorial nature of the many pathways implicated in diabetic retinopathy requires a very detailed approach to elucidate the key mechanisms involved and their interactions in order to develop logical strategies aimed at therapeutic intervention. Fortunately, the streptozotocin rat model of diabetes displays many of the morphological and functional changes to the retinal vasculature that are evident in human diabetic retinopathy. This study reviews some of the recent experimental work by the authors in the streptozotocin rat, compares their findings to the human pathology, and outlines potential new avenues for therapeutic intervention. In particular, the improved understanding of which layers of the inner retina have the most stringent metabolic demands has helped identify which retinal layers are most susceptible to metabolic or hypoxic/ischaemic insult. It is concluded that improved treatment outcomes may ensue if the therapy is targeted at the appropriate tissue at specific stages of the disease.