Luteolin, a plant flavonoid, has a wide range of therapeutic effects. The aim of this study is to examine the effect of luteolin on diabetes-induced oxidative stress and inflammation in the retina of rats. A diabetic rat model was induced by intraperitoneal injection of streptozotocin (60 mg kg⁻¹), and the rats were orally administrated luteolin in doses of 25, 50 and 100 mg kg⁻¹ for 6 weeks. The results showed that luteolin administration prevented the diabetes-induced decrease in the antioxidant capacity and increases in malondialdehyde (MDA), 8-hydroxy-2′-deoxyguanosine (8-OHdG) and nitrotyrosine levels. Luteolin also inhibited the diabetes-induced elevation in the levels of IL-1β, VEGF and NF-κB. However, in the high dose group (100 mg kg⁻¹), retinal glutathione (GSH) levels were restored to close to normal levels. These effects of luteolin were achieved without amelioration of the severity of hyperglycemia. These data suggest that luteolin can be effective for protection against diabetes-induced retinal neurodegeneration by inhibiting the levels of inflammatory markers and oxidative stress.