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Abstract Diabetic retinopathy (DR) is a leading cause of irreversible vision loss in working-age populations. Fat mass and obesity-associated protein (FTO) is an N6-methyladenosine (m6A) demethylase that demethylates RNAs involved in energy homeostasis, though its influence on DR is not well studied. Herein, we detected elevated FTO expression in vitreous fibrovascular membranes of patients with proliferative DR. FTO promoted cell cycle progression and tip cell formation of endothelial cells (ECs) to facilitate angiogenesis in vitro, in mice, and in zebrafish. FTO also regulated EC-pericyte crosstalk to trigger diabetic microvascular leakage, and mediated EC–microglia interactions to induce retinal inflammation and neurodegeneration in vivo and in vitro. Mechanistically, FTO affected EC features via modulating CDK2 mRNA stability in an m6A-YTHDF2-dependent manner. FTO up-regulation under diabetic conditions was driven by lactate-mediated histone lactylation. FB23-2, an inhibitor to FTO’s m6A demethylase activity, suppressed angiogenic phenotypes in vitro. To allow for systemic administration, we developed a nanoplatform encapsulating FB23-2 and confirmed its targeting and therapeutic efficiency in mice. Collectively, our study demonstrates that FTO is important for EC function and retinal homeostasis in DR, and warrants further investigation as a therapeutic target for DR patients.