In proliferative diabetic retinopathy (PDR), retinal ischemia promotes neovascularization (NV), which can lead to profound vision loss in diabetic patients. Treatment for PDR, panretinal photocoagulation, is inherently destructive and has significant visual consequences. Therapies targeting vascular endothelial growth factor (VEGF) have transformed the treatment of diabetic eye disease but have proven inadequate for treating NV, prompting exploration for additional therapeutic options for PDR patients. In this regard, extracellular proteolysis is an early and sustained activity strictly required for NV. Extracellular proteolysis in NV is facilitated by the dysregulated activity of matrix metalloproteinases (MMPs). Here, we set out to better understand the regulation of MMPs by ischemia in PDR. We demonstrate that accumulation of hypoxia-inducible factor-1α in Müller cells induces the expression of VEGF, which, in turn, promotes increased MMP-2 expression and activity in neighboring endothelial cells (ECs). MMP-2 expression was detected in ECs in retinal NV tissue from PDR patients, whereas MMP-2 protein levels were elevated in the aqueous of PDR patients compared with controls. Our findings demonstrate a complex interplay among hypoxic Müller cells, secreted angiogenic factors, and neighboring ECs in the regulation of MMP-2 in retinal NV and identify MMP-2 as a target for the treatment of PDR.