Western diet-induced obesity is linked to the development of metabolic dysfunctions, including type 2 diabetes and complications that include retinopathy, a leading cause of blindness. Aberrant activation of the inflammasome cascade leads to the progression of obesity-induced pathologies. Our lab showed the critical role of arginase 2 (A2), the mitochondrial isoform of this ureahydrolase, in obesity-induced metabolic dysfunction and inflammation. A2 deletion also has been shown to be protective against retinal inflammation in models of ischemic retinopathy and multiple sclerosis. We investigated the effect of A2 deletion on western diet-induced retinopathy. Wild-type mice fed a high-fat, high-sucrose western diet for 16 weeks exhibited elevated retinal expression of A2, markers of the inflammasome pathway, oxidative stress, and activation of microglia/macrophages. Western diet feeding induced exaggerated retinal light responses without affecting visual acuity or retinal morphology. These effects were reduced or absent in mice with global A2 deletion. Exposure of retinal endothelial cells to palmitate and high glucose, a mimic of the obese state, increased expression of A2 and inflammatory mediators and induced cell death. These effects, except for A2, were prevented by pretreatment with an arginase inhibitor. Collectively, our study demonstrated a substantial role of A2 in early manifestations of diabetic retinopathy.