PURPOSE: To assess retinal function in individuals with type 2 diabetes with no retinopathy or nonproliferative diabetic retinopathy (NPDR) and determine the relationship between retinal function and retinal vascular caliber. METHODS: A full-field electroretinogram (ERG) and retinal vascular caliber measurements were performed in subjects with nonproliferative diabetic retinopathy (NPDR, n = 10), diabetic subjects without retinopathy (no-DR, n = 18), and normal control subjects (n = 18). The response amplitudes and implicit times of scotopic and photopic ERG and the retinal arteriolar and venular calibers were compared among the study groups. The relationships between ERG parameters and retinal vascular calibers were determined. RESULTS: There were statistically significant differences between diabetic (no-DR and NPDR groups) and control subjects in the amplitudes and implicit times of rod-derived ERG responses, but not in the cone-derived ERG responses. All the oscillatory potential (OP) components (OP1-OP4) were significantly reduced in amplitude and increased in implicit time in the no-DR and NPDR groups. No significant difference was found in any of the ERG parameters between the no-DR and NPDR groups. Of all the ERG parameters examined, only OP4 amplitude correlated significantly with the retinal arteriolar caliber (r = -0.556, P = 0.006). None of the OP components correlated significantly with retinal venular caliber. CONCLUSIONS: Significant retinal dysfunction was demonstrated in all diabetic patients, even in those without clinically detectable retinopathy, with the rod system being predominantly affected. OP4 amplitude correlates with retinal arteriolar caliber in diabetic patients, suggesting a correlation between retinal neuronal dysfunction and microvasculature changes.