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Diabetic retinopathy (DR) is an eye disease, which affects the people who are all having the diabetes for more than 10 years. The ophthalmologist identifies when the dilated eye exam causes severe in any one of the following deviations in the retina: changes in blood vessels, leaking blood vessels, newly grown blood vessels, swelling of the macula, changes in the lens, and damages to the nerve tissue. It can eventually lead to vision loss. The early detection of DR prevents the cause of blindness. In this paper, we propose the retinal image segmentation and extraction of blood vessels by morphological processing, thresholding, edge detection, and adaptive histogram equalization. For the automatic diagnosis of DR from the fundus image, we also developed a network with the convolutional neural network architecture for accurately classifying its severity. By using high-end graphical processor unit (GPU), we trained this network on the publicly available dataset such as DRIVE, DIARETDB0, and DIARETDB1_v1, and the images collected from the Aravind Eye Hospital, Coimbatore, India. Our proposed CNN achieves a sensitivity of 98%, a specificity of 93%, and an accuracy of 96.9% containing a database of 854 images. [ABSTRACT FROM AUTHOR]