Chronic hyperglycemia and activation of receptor for advanced glycation end products (RAGE) are known risk factors for microvascular disease development in diabetic retinopathy. Thioredoxin‐interacting protein (TXNIP), an endogenous inhibitor of antioxidant thioredoxin (TRX), plays a causative role in diabetes and its vascular complications. Herein we investigate whether HG and RAGE induce inflammation in rat retinal endothelial cells (EC) under diabetic conditions in culture through TXNIP activation and whether epigenetic mechanisms play a role in inflammatory gene expression. We show that RAGE activation by its ligand S100B or HG treatment of retinal EC induces the expression of TXNIP and inflammatory genes such as Cox2, VEGF‐A, and ICAM1. TXNIP silencing by siRNA impedes RAGE and HG effects while stable over‐expression of a cDNA for human TXNIP in EC elevates inflammation. p38 MAPK‐NF‐κB signaling pathway and histone H3 lysine (K) nine modifications are involved in TXNIP‐induced inflammation. Chromatin immunoprecipitation (ChIP) assays reveal that TXNIP over‐expression in EC abolishes H3K9 tri‐methylation, a marker for gene inactivation, and increases H3K9 acetylation, an indicator of gene induction, at proximal Cox2 promoter bearing the NF‐κB‐binding site. These findings have important implications toward understanding the molecular mechanisms of ocular inflammation and endothelial dysfunction in diabetic retinopathy. J. Cell. Physiol. 221: 262–272, 2009. © 2009 Wiley‐Liss, Inc