Diabetic retinopathy (DR) has been classically considered to be a microcirculatory disease of the retina caused by the deleterious metabolic effects of hyperglycemia per se and the metabolic pathways triggered by hyperglycemia. However, retinal neurodegeneration is already present before any microcirculatory abnormalities can be detected in ophthalmoscopic examination. In other words, retinal neurodegeneration is an early event in the pathogenesis of DR which predates and participates in the microcirculatory abnormalities that occur in DR. Therefore, the study of the mechanisms that lead to neurodegeneration will be essential to identify new therapeutic targets in the early stages of DR. Elevated levels of glutamate and the overexpression of the renin- angiotensin-system play an essential role in the neurodegenerative process that occurs in diabetic retina. Among neuroprotective factors, pigment epithelial derived factor, somatostatin and erythropoietin seem to be the most relevant and these will be considered in this review. Nevertheless, it should be noted that the balance between neurotoxic and neuroprotective factors rather than levels of neurotoxic factors alone will determine the presence or absence of retinal neurodegeneration in the diabetic eye. New strategies, based on either the delivery of neuroprotective agents or the blockade of neurotoxic factors, are currently being tested in experimental models and in clinical pilot studies. Whether these novel therapies will eventually supplement or prevent the need for laser photocoagulation or vitrectomy awaits the results of additional clinical research.