Since vascular endothelial growth factor (VEGF) has a strong effect on induction of vascular permeability, VEGF is an attractive candidate gene for development of diabetic macular edema (ME). Among the 378 patients with type 2 diabetes studied, 203 patients had no retinopathy, 93 had non-proliferative diabetic retinopathy (NPDR), and 82 had proliferative diabetic retinopathy (PDR). ME was present in 16 patients with NPDR and 47 patients with PDR. We genotyped three VEGF polymorphisms: C-2,578A, G-1,154A, and C-634G. Genotype and allele distribution of C-634G, but not C-2,578A or G-1,154A, were significantly different between patients with and without diabetic retinopathy. Logistic regression analysis revealed that the C-634G genotype was a risk factor for DR (p = 0.002), and furthermore for ME (p = 0.047), independently from severity of DR, with the -634C allele increasing the risk. Macular thickness measured by optical coherence tomography was correlated with the C-634G genotype, with the trend increasing with the presence of more -634C alleles (p = 0.006). Stepwise regression analysis showed that duration of diabetes and presence of the C-634G genotype were independent predictors of macular thickness. In addition, basic transcriptional activity levels associated with the -634C allele were greater compared to those seen with the -634G allele in human glioma and lymphoblastic T-lymphocyte cells. These results demonstrate that the VEGF C-634G polymorphism is a genetic risk factor for ME as well as DR.