Diabetic retinopathy (DR) is one of the most common retinal diseases world-wide. It has a complex pathology that involves the vasculature of the inner retina and breakdown of the blood-retinal barrier. Extensive research has determined that DR is not only a vascular disease but also has a neurodegenerative component and that essentially all types of cells in the retina are affected, leading to chronic loss of visual function. A great deal of work using animal models of DR has established the loss of neurons and pathology of other cell types, including supporting glial cells. There has also been an increased emphasis on measuring retinal function in the models, as well as further validation and extension of the animal studies by clinical and translational research. This article will attempt to summarize the more recent developments in research towards understanding the complexities of retinal neurodegeneration and functional vision loss in DR.