Diabetic retinopathy (DR) is a major source of retinal disease and vision loss worldwide. Current treatments fail to address the loss of neurons and are associated with significant side effects. Here, we investigated whether retinal progenitor cells (RPCs) could improve anatomic and functional outcomes in a rat model of DR. Male Long Evans (LE) rats were given streptozotocin (STZ), and the induction of diabetes was confirmed prior to the intravitreal injection of RPCs, either allogeneic (no immunosuppression) or human (with cyclosporin A), at 1 week post-induction. Animals were tested at 6 weeks post-induction via electroretinogram (ERG), optomotor response (OR), and contrast sensitivity (CS). Retinas were harvested post-mortem, 8 weeks post-STZ induction, and analyzed using immunohistochemistry (IHC). In rat RPC-treated eyes, ERG (b-wave, oscillatory potentials), OR, and CS all showed a positive effect for cell treatment versus controls. IHC showed a markedly diminished extravasation of albumin, a decreased VEGF expression, and an improved morphology in cellular and synaptic layers. Human RPC-treated eyes replicated a subset of these results. Together, this provides evidence of both anatomic and functional treatment effects in a rat model of DR, encompassing retinal neuroprotection as well as improved vascular integrity, thereby supporting the further investigation of intravitreal RPCs for the treatment of this condition.