Increased O-GlcNAcylation, a well-known post-translational modification of proteins causally linked to various detrimental cellular functions in pathological conditions including diabetic retinopathy (DR). Previously we have shown that endothelial activation induced by inflammation and hyperglycemia results in the endoplasmic reticulum (ER) stress-mediated intercellular junction alterations accompanied by visual deficits in a tie2-TNF-α transgenic mouse model. In this study, we tested the hypothesis that increased ER stress via O-GlcNAcylation of VE-Cadherin likely contribute to endothelial permeability. We show that ER stress leads to GRP78 translocation to the plasma membrane, increased O-GlcNAcylation of proteins, particularly VE-Cadherin resulting in a defective complex partnering leading to the loss of retinal endothelial barrier integrity and increased transendothelial migration of monocytes. We further show an association of GRP78 with the VE-Cadherin under these conditions. Interestingly, cells exposed to ER stress inhibitor, tauroursodeoxycholic acid partially mitigated all these effects. Our findings suggest an essential role for ER stress and O-GlcNAcylation in altering the endothelial barrier function and reveal a potential therapeutic target in the treatment of DR.