Diabetic macular edema is the leading cause of decreased vision from diabetic retinopathy. This decreased vision is caused by an increase in extracellular fluid within the retina distorting the retinal architecture and frequently taking on a pattern of cystoid macular edema. This fluid accumulates within the retina because of the breakdown of the barriers within the retinal blood vessels and possibly the pigment epithelium. Diabetic macular edema tends to be a chronic disorder. Although spontaneous recovery is not an uncommon occurrence, over one-half of diabetics with macular edema will lose two or more lines of visual acuity within two years. The most promising treatment for diabetic macular edema has been photocoagulation. It is recommended that in all patients with diabetic macular edema attempts be made to normalize elevated blood glucose, decrease elevated blood pressure, and improve cardiac or renal status. Reduction of serum lipids by diet or pharmacologic means is an unproven treatment at this time. The Early Treatment Diabetic Retinopathy Study hopefully will provide more definitive information as to whether photocoagulation is effective in various subgroups of patients with diabetic macular edema.