The drug fenofibrate has received major attention as a novel medical treatment for diabetic retinopathy (DR) and other diabetes-induced microvascular complications. This interest stems from two recent large, well-designed clinical trials that demonstrated large reductions in the progression of DR and the need for laser intervention, in addition to a reduction in renal and neurological outcomes, in patients with type 2 diabetes. In both trials, the greatest benefit on DR progression was observed in those patients with DR at baseline. Originally considered a lipid-modifying drug, it now appears that multiple mechanisms may underpin the benefit of fenofibrate on diabetic microvascular end points. Fenofibrate regulates the expression of many different genes, with a range of beneficial effects on lipid control, inflammation, angiogenesis, and cell apoptosis. These factors are believed to be important in the development of DR regardless of the underlying diabetes etiology. Cell experiments have demonstrated improved survival of retinal endothelial and pigment epithelial cells in conjunction with reduced stress signaling under diabetic conditions. Further, fenofibrate improves retinal outcomes in rodent models of diabetes and retinal neovascularization. Given the results of these preclinical studies, further clinical trials are needed to establish the benefits of fenofibrate in other forms of diabetes, including type 1 diabetes. In DR management, fenofibrate could be a useful adjunctive treatment to modifiable risk factor control and regular ophthalmic review. Its incorporation into clinical practice should be continually revised as more information becomes available.