Microglial activation and subsequent pathological neuroinflammation contribute to diabetic retinopathy (DR). However, the underlying mechanisms of microgliosis, and means to effectively suppress pathological microgliosis, remain incompletely understood. Peroxisome proliferator-activated receptor alpha (PPARα) is a transcription factor that regulates lipid metabolism. The present study aimed to determine if PPARα affects pathological microgliosis in DR. In global Pparα mice, retinal microglia exhibited decreased structural complexity and enlarged cell bodies, suggesting microglial activation. Microglia-specific conditional Pparα^−/− (PCKO) mice showed decreased retinal thickness as revealed by optical coherence tomography. Under streptozotocin (STZ)-induced diabetes, diabetic PCKO mice exhibited decreased electroretinography response, while diabetes-induced retinal dysfunction was alleviated in diabetic microglia-specific Pparα-transgenic (PCTG) mice. Additionally, diabetes-induced retinal pericyte loss was exacerbated in diabetic PCKO mice and alleviated in diabetic PCTG mice. In cultured microglial cells with the diabetic stressor 4-HNE, metabolic flux analysis demonstrated that Pparα ablation caused a metabolic shift from oxidative phosphorylation to glycolysis. Pparα deficiency also increased microglial STING and TNF-α expression. Taken together, these findings revealed a critical role for PPARα in pathological microgliosis, neurodegeneration, and vascular damage in DR, providing insight into the underlying molecular mechanisms of microgliosis in this context and suggesting microglial PPARα as a potential therapeutic target.