Retinal Müller cells are major producers of inflammatory and angiogenic cytokines which contribute to diabetic retinopathy (DR). Over-activation of the Wnt/β-catenin pathway has been shown to play an important pathogenic role in DR. However, the roles of Müller cell-derived Wnt/β-catenin signaling in retinal neovascularization (NV) and DR remain undefined. In the present study, mice with conditional β-catenin knockout (KO) in Müller cells were generated and subjected to oxygen-induced retinopathy (OIR) and streptozotocin (STZ)-induced diabetes. Wnt signaling was evaluated by measuring levels of β-catenin and expression of its target genes using immunoblotting. Retinal vascular permeability was measured using Evans blue as a tracer. Retinal NV was visualized by angiography and quantified by counting pre-retinal nuclei. Retinal pericyte loss was evaluated using retinal trypsin digestion. Electroretinography was performed to examine visual function. No abnormalities were detected in the β-catenin KO mice under normal conditions. In OIR, retinal levels of β-catenin and VEGF were significantly lower in the β-catenin KO mice than in littermate controls. The KO mice also had decreased retinal NV and vascular leakage in the OIR model. In the STZ-induced diabetic model, disruption of β-catenin in Müller cells attenuated over-expression of inflammatory cytokines and ameliorated pericyte dropout in the retina. These findings suggest that Wnt signaling activation in Müller cells contributes to retinal NV, vascular leakage and inflammation and represents a potential therapeutic target for DR.