Purpose: To define gene expression changes associated with diabetic retinopathy in a mouse model using next generation sequencing, and to utilize transcriptome signatures to assess molecular pathways by which pharmacological agents inhibit diabetic retinopathy. Methods: We applied a high throughput RNA sequencing (RNA-seq) strategy using Illumina GAIIx to characterize the entire retinal transcriptome from nondiabetic and from streptozotocin-treated mice 32 weeks after induction of diabetes. Some of the diabetic mice were treated with inhibitors of receptor for advanced glycation endproducts (RAGE) and p38 mitogen activated protein (MAP) kinase, which have previously been shown to inhibit diabetic retinopathy in rodent models. The transcripts and alternatively spliced variants were determined in all experimental groups. Results: Next generation sequencing-based RNA-seq profiles provided comprehensive signatures of transcripts that are altered in early stages of diabetic retinopathy. These transcripts encoded proteins involved in distinct yet physiologically relevant disease-associated pathways such as inflammation, microvasculature formation, apoptosis, glucose metabolism, Wnt signaling, xenobiotic metabolism, and photoreceptor biology. Significant upregulation of crystallin transcripts was observed in diabetic animals, and the diabetes-induced upregulation of these transcripts was inhibited in diabetic animals treated with inhibitors of either RAGE or p38 MAP kinase. These two therapies also showed dissimilar regulation of some subsets of transcripts that included alternatively spliced versions of arrestin, neutral sphingomyelinase activation associated factor (Nsmaf), SH3-domain GRB2-like interacting protein 1 (Sgip1), and axin. Conclusions: Diabetes alters many transcripts in the retina, and two therapies that inhibit the vascular pathology similarly inhibit a portion of these changes, pointing to possible molecular mechanisms for their beneficial effects. These therapies also changed the abundance of various alternatively spliced versions of signaling transcripts, suggesting a possible role of alternative splicing in disease etiology. Our studies clearly demonstrate RNA-seq as a comprehensive strategy for identifying disease-specific transcripts, and for determining comparative profiles of molecular changes mediated by candidate drugs. Diabetes has emerged as a major worldwide public health concern, and the number of diabetics is estimated to exceed 400 million by the year 203