βA3/A1-crystallin, a lens protein that is also expressed in astrocytes, is produced as βA3 and βA1-crystallin isoforms by leaky ribosomal scanning. In a previous human proteome high-throughput array, we found that βA3/A1-crystallin interacts with protein tyrosine phosphatase 1B (PTP1B), a key regulator of glucose metabolism. This prompted us to explore possible roles of βA3/A1-crystallin in metabolism of retinal astrocytes. We found that βA1-crystallin acts as an uncompetitive inhibitor of PTP1B, but βA3-crystallin does not. Loss of βA1-crystallin in astrocytes triggers metabolic abnormalities and inflammation. In CRISPR/cas9 gene-edited βA1-knockdown (KD) mice, but not in βA3-knockout (KO) mice, the streptozotocin (STZ)-induced diabetic retinopathy (DR)-like phenotype is exacerbated. Here, we have identified βA1-crystallin as a regulator of PTP1B; loss of this regulation may be a new mechanism by which astrocytes contribute to DR. Interestingly, proliferative diabetic retinopathy (PDR) patients showed reduced βA1-crystallin and higher levels of PTP1B in the vitreous humor.