Diabetic retinopathy (DR) is a common complication of diabetes mellitus (DM), primarily affecting microvascular structures in the retina. The diagnosis of DR relies on detecting microvascular lesions, and treatment remains challenging. Anti-vascular endothelial growth factor (VEGF) therapy has shown significant clinical benefits, but many patients do not achieve substantial visual improvement. Therefore, there is an urgent need for new treatments. Laboratory and clinical evidence suggests that inflammation and retinal neurodegeneration may contribute to early-stage DR. Further investigation of these underlying mechanisms may provide targets for early interventions. This review covers the current understanding and new insights into the pathophysiology of DR, as well as clinical treatments, including recent laboratory findings and clinical trials. Key topics include the role of hyperglycemia in retinal microvasculopathy, the involvement of inflammation, and the significance of retinal neurodegeneration. Additionally, the review discusses current and novel treatment strategies, such as anti-angiogenic therapy, anti-inflammatory therapy, laser treatment, and other therapeutic agents.Diabetic retinopathy (DR) is a common complication of diabetes mellitus (DM), primarily affecting microvascular structures in the retina. The diagnosis of DR relies on detecting microvascular lesions, and treatment remains challenging. Anti-vascular endothelial growth factor (VEGF) therapy has shown significant clinical benefits, but many patients do not achieve substantial visual improvement. Therefore, there is an urgent need for new treatments. Laboratory and clinical evidence suggests that inflammation and retinal neurodegeneration may contribute to early-stage DR. Further investigation of these underlying mechanisms may provide targets for early interventions. This review covers the current understanding and new insights into the pathophysiology of DR, as well as clinical treatments, including recent laboratory findings and clinical trials. Key topics include the role of hyperglycemia in retinal microvasculopathy, the involvement of inflammation, and the significance of retinal neurodegeneration. Additionally, the review discusses current and novel treatment strategies, such as anti-angiogenic therapy, anti-inflammatory therapy, laser treatment, and other therapeutic agents.