Diabetic retinopathy (DR) affects about 200 million people worldwide, causing leakage of blood components into retinal tissues, leading to activation of microglia, the resident phagocytes of the retina, promoting neuronal and vascular damage. The microglial receptor, CX3CR1, binds to fractalkine (FKN), an anti-inflammatory chemokine that is expressed on neuronal membranes (mFKN), and undergoes constitutive cleavage to release a soluble domain (sFKN). Deficiencies in CX3CR1 or FKN showed increased microglial activation, inflammation, vascular damage, and neuronal loss in experimental mouse models. To understand the mechanism that regulates microglia function, recombinant adeno-associated viral vectors (rAAV) expressing mFKN or sFKN were delivered to intact retinas prior to diabetes. High-resolution confocal imaging and mRNA-seq were used to analyze microglia morphology and markers of expression, neuronal and vascular health, and inflammatory mediators. We confirmed that prophylactic intra-vitreal administration of rAAV expressing sFKN (rAAV–sFKN), but not mFKN (rAAV–mFKN), in FKNKO retinas provided vasculo- and neuro-protection, reduced microgliosis, mitigated inflammation, improved overall optic nerve health by regulating microglia-mediated inflammation, and prevented fibrin(ogen) leakage at 4 weeks and 10 weeks of diabetes induction. Moreover, administration of sFKN improved visual acuity. Our results elucidated a novel intervention via sFKN gene therapy that provides an alternative pathway to implement translational and therapeutic approaches, preventing diabetes-associated blindness.