The incidence of diabetes continues to rise among all ages and ethnic groups worldwide. Diabetic retinopathy (DR) is a complication of diabetes that affects the retinal neurovasculature causing serious vision problems, including blindness. Its pathogenesis and severity is directly linked to the chronic exposure to high glucose conditions. No treatments are currently available to stop the development and progression of DR. To develop new and effective therapeutic approaches, it is critical to better understand how hyperglycemia contributes to the pathogenesis of DR at the cellular and molecular levels. We propose alterations in O-GlcNAc modification of target proteins during diabetes contribute to the development and progression of DR. The O-GlcNAc modification is regulated through hexosamine biosynthetic pathway. We showed this pathway is differentially activated in various retinal vascular cells under high glucose conditions perhaps due to their selective metabolic activity. O-GlcNAc modification can alter protein stability, activity, interactions, and localization. By targeting the same amino acid residues (serine and threonine) as phosphorylation, O-GlcNAc modification can either compete or cooperate with phosphorylation. Here we will summarize the effects of hyperglycemia-induced O-GlcNAc modification on the retinal neurovasculature in a cell-specific manner, providing new insight into the role of O-GlcNAc modification in early loss of retinal pericytes and the pathogenesis of DR.