Diabetes is known to cause significant alterations in the retinal vasculature. Indeed, diabetic retinopathy is the leading cause of blindness in those of working age. Considerable evidence is emerging that indicates that retinal neurons are also altered during diabetes. Moreover, many types of neuronal deficits have been observed in animal models and patients prior to the onset of vascular compromise. Such clinical tools as the flash ERG, multifocal ERG, colour vision, contrast sensitivity and short-wavelength automated perimetry, all provide novel means whereby neuronal dysfunction can be detected at early stages of diabetes. The underlying mechanisms that lead to neuronal deficits are likely to be broad. Retinal glial cells play an essential role in maintaining the normal function of the retina. There is accumulating evidence that Müller cells are abnormal during diabetes. They are known to become gliotic, display altered potassium siphoning, glutamate and GABA uptake and are also known to express several modulators of angiogenesis. This review will examine the evidence that neurons and glia are altered during diabetes and the relationship these changes have with vascular compromise.