The present study aimed to investigate changes in retinal gene expression in streptozotocin (STZ)‑induced diabetic rats using next‑generation sequencing, utilize transcriptome signatures to investigate the molecular mechanisms of diabetic retinopathy (DR), and identify novel strategies for the treatment of DR. Diabetes was chemically induced in 10‑week‑old male Sprague‑Dawley rats using STZ. Flash‑electroretinography (F‑ERG) was performed to evaluate the visual function of the rats. The retinas of the rats were removed to perform high throughput RNA sequence (RNA‑seq) analysis. The a‑wave, b‑wave, oscillatory potential 1 (OP1), OP2 and ∑OP amplitudes were significantly reduced in the diabetic group, compared with those of the control group (P<0.05). Furthermore, the implicit b‑wave duration 16 weeks post‑STZ induction were significantly longer in the diabetic rats, compared with the control rats (P<0.001). A total of 868 genes were identified, of which 565 were upregulated and 303 were downregulated. Among the differentially expressed genes (DEGs), 94 apoptotic genes and apoptosis regulatory genes, and 19 inflammatory genes were detected. The results of the KEGG pathway significant enrichment analysis revealed enrichment in cell adhesion molecules, complement and coagulation cascades, and antigen processing and presentation. Diabetes alters several transcripts in the retina, and RNA‑seq provides novel insights into the molecular mechanisms underlying DR.