Diabetic retinopathy (DR) remains one of the leading risk factors and causes of blindness worldwide. Tight metabolic and blood pressure control has been shown to significantly decrease the risk of development as well as progression of retinopathy and remains a cornerstone in the medical management of DR. Laser photocoagulation and vitrectomy are important tools for preventing severe visual loss from sight-threatening DR and its complications. New pharmacological therapies to target the underlying biochemical mechanisms that cause DR are also being evaluated in order to overcome the limitations of current treatment modalities. In this context, the role of protein kinase C inhibitors, intravitreal injections of steroids, vascular endothelial growth factor inhibitors, angiotensin converting enzyme inhibitors such as candesartan, and growth hormone inhibitors is promising. Although treatment can help prevent blindness in a majority of cases, the key variable in the success of therapy lies in identifying patients with retinopathy before their vision is affected. This calls for timely eye examination of diabetic patients. The present article is a comprehensive review of DR with special emphasis on its pathophysiology and management aspects.