Purpose Diabetic retinopathy (DR) is associated with retinal neuronal and vascular damage. DR has previously been shown to affect the photosensitive retinal ganglion cells (pRGCs). PRGCs are essential for the entrainment of circadian rhythms; thus, DR progression could lead to worsening sleep quality and mood. We investigate the relationship between increasing DR severity, and its impact on sleep quality and mood. Methods A total of 430 participants with DR, and 303 healthy controls with no ocular disease or preexisting sleep disorders were recruited. DR severity was grouped as follows: 1, mild nonproliferative (NPDR); 2, moderate/severe NPDR; and 3, proliferative diabetic retinopathy (PDR). Sleep, mood, and quality of life were assessed using the Pittsburgh Sleep Quality Index (PSQI), quality of life (SF-36), and Hospital Anxiety and Depression Score (HADS) questionnaires. Data were analyzed by severity of DR, and correlated with sleep, QOL, and mood and compared to controls. Results No significant difference between PSQI scores in the DR group or the control group was identified despite severity of DR. Mean anxiety and depression scores were within the normal range for both groups. Despite a lower general health and physical function, the DR group had lower anxiety scores than controls. Conclusions These data show that even in severe DR, sleep quality is similar to controls. However, this could be explained by the majority of individuals in this study having good visual acuities in the better eye with a residual population of pRGCs remaining unaffected by DR.