Residual insulin secretion provides important protection against the development of diabetic retinopathy in type 1 diabetes. The data to support this in type 2 diabetes are unclear. We therefore tested in type 2 diabetes whether markers of residual beta-cell function are associated with the development of diabetic retinopathy, an important microvascular complication of diabetes.Prospective, cross-sectional, family-based study.585 Latino type 2 diabetic participants, ascertained in families via a proband either with known diabetes duration of greater than 10 years and/or with diabetic retinopathy.CIRCULATING LEVELS OF FASTING INSULIN AND C PEPTIDE MEASURED AND CORRELATED TO DEGREE OF DIABETIC RETINOPATHY, ASSESSED BY DIGITAL FUNDUS PHOTOGRAPHY AND GRADED USING THE MODIFIED AIRLIE HOUSE CLASSIFICATION AND THE EARLY TREATMENT DIABETIC RETINOPATHY STUDY SCALE (RANGE: levels 10-85).Fasting plasma insulin (β=-0.29; 95% CI -0.38 to -0.20; p<0.0001) and C peptide (β=-0.21; 95% CI -0.30 to -0.13; p<0.0001) concentrations in these diabetic participants were significantly correlated with retinopathy and its degree of severity. This relationship remained significant after adjusting for potential covariates including age, gender, glycosylated hemoglobin, duration of diabetes, blood pressure, and renal function.These data suggest that residual endogenous insulin secretion is associated with the presence of diabetic retinopathy and its severity in Latinos with familial type 2 diabetes. It remains to be proven whether beta-cell targeted therapies, to maintain beta-cell mass and/or function in addition to glycemic control, will further the goal of preventing diabetic microvascular disease.