Retinal neovascularization and macular edema are central features of diabetic retinopathy, a major cause of blindness in working age adults. The currently established treatment for diabetic retinopathy targets the vascular pathology by laser photocoagulation. This approach is associated with significant adverse effects due the destruction of neural tissue and is not always effective. Characterization of the molecular and cellular processes involved in vascular growth and hyperpermeability has led to the recognition that the angiogenic growth factor and vascular permeability factor VEGF (vascular endothelial growth factor) play a pivotal role in the retinal microvascular complications of diabetes. Thus, VEGF represents an important target for therapeutic intervention in diabetic retinopathy. Agents that directly inhibit the actions of VEGF and its receptors show considerable promise, but have not proven to be completely effective in blocking pathological angiogenesis. Therefore, a better understanding of the molecular events that control VEGF expression and mediate its downstream actions is important to define more precise therapeutic targets for intervention in diabetic retinopathy. This review highlights the current understanding of the process by which VEGF gene expression is regulated and how VEGF's biological effects are altered during diabetes. In particular, cellular and molecular alterations seen in diabetic models are considered in the context of high glucose-mediated oxidative stress effects on VEGF expression and action. Potential therapeutic strategies for preventing VEGF overexpression or blocking its pathological actions in the diabetic retina are considered.