Adeno-associated virus (AAV) vector-mediated delivery of inhibitors of blood-retinal barrier breakdown (BRBB) offers promise for the treatment of diabetic macular edema. Here, we demonstrated a reversal of blood-retinal barrier pathology mediated by AAV type 2 (AAV2) vectors encoding vasoinhibin or soluble VEGF receptor 1 (sFlt-1) when administered intravitreally to diabetic rats. Efficacy and safety of the AAV2 vasoinhibin vector were tested by monitoring its effect on diabetes-induced changes in the retinal vascular bed and thickness, and in the electroretinogram (ERG). Also, the transduction of AAV2 vectors and expression of AAV2 receptors and co-receptors were compared between the diabetic and the non-diabetic rat retinas. AAV2 vasoinhibin or AAV2 sFlt-1 vectors were injected intravitreally before or after enhanced BRBB due to diabetes induced by streptozotocin. The BRBB was examined by the Evans blue method, the vascular bed by fluorescein angiography, expression of the AAV2 EGFP reporter vector by confocal microscopy, and the AAV2 genome, expression of transgenes, receptors, and co-receptors by quantitative PCR. AAV2 vasoinhibin and sFlt-1 vectors inhibited the diabetes-mediated increase in BRBB when injected after, but not before, diabetes was induced. The AAV2 vasoinhibin vector decreased retinal microvascular abnormalities and the diabetes-induced reduction of the B-wave of the ERG, but it had no effect in non-diabetic controls. Also, retinal thickness was not altered by diabetes or by the AAV2 vasoinhibin vector. The AAV2 genome, vasoinhibin and sFlt-1 transgenes, and EGFP levels were higher in the retinas from diabetic rats and were associated with an elevated expression of AAV2 receptors (syndecan, glypican, and perlecan) and co-receptors (fibroblast growth factor receptor 1, αvβ5 integrin, and hepatocyte growth factor receptor). We conclude that retinal transduction and efficacy of AAV2 vectors are enhanced in diabetes, possibly due to their elevated cell entry. AAV2 vectors encoding vasoinhibin and sFlt-1 may be desirable gene therapeutics to target diabetic retinopathy and macular edema.