Diabetic retinopathy (DR), commonly classified as a microvascular complication of diabetes, is now recognized as a neurovascular complication or sensory neuropathy resulting from disruption of the neurovascular unit. Current therapies for DR target the vascular complication of the disease process, including neovascularization and diabetic macular edema. Since neurodegeneration is an early event in the pathogenesis of DR, it will be important to unravel the mechanisms that contribute to neuroretinal cell death in order to develop novel treatments for the early stages of DR. In this review we comment on how inflammation, the metabolic derangements associated with diabetes, loss of neuroprotective factors, and dysregulated glutamate metabolism may contribute to retinal neurodegeneration during diabetes. Promising potential therapies based on these specific aspects of DR pathophysiology are also discussed. Finally, we stress the importance of developing and validating new markers of visual function that can be used to shorten the duration of clinical trials and accelerate the delivery of novel treatments for DR to the public.