Decades of research into the pathophysiology and management of diabetic retinopathy have revolutionized our understanding of the disease process. Diabetic retinopathy is now more accurately defined as a neurovascular rather than a microvascular disease as neurodegenerative disease precedes and coexists with microvascular changes. However, the complexities of the pathways involved in different stages of disease severity continue to remain a challenging issue for drug discovery. Currently, laser photocoagulation is the mainstay of treatment for proliferative diabetic retinopathy, but is gradually being superseded for diabetic macular oedema. However, it is destructive and at best results in a gradual but modest improvement in vision in the long term. So, diabetic retinopathy remains the most prevalent cause of visual impairment in the working-age population despite established screening programmes, early diagnosis and treatment of the condition. The recent discovery of inhibitors of vascular endothelial growth factor is revolutionizing the management of diabetic retinopathy, particularly diabetic macular oedema. However, not all patients respond to anti-vascular endothelial growth factor agents, reinforcing the fact that diabetic retinopathy is a multifactorial disease. Studies are still required to improve our understanding of how retinal structure correlates with visual function. It is hoped that these will lead to better characterization of the disease phenotype based on treatment responses to different agents and allow an algorithm to be developed that will guide the management of diabetic retinopathy and diabetic macular oedema at different stages of severity.