Purpose: To investigate the effect of a selective aquaporin 4 (AQP4) inhibitor, 2-(nicotinamide)-1,3,4-thiadiazole (TGN-020), on the expression of vascular endothelial growth factor (VEGF) and reactive oxygen species (ROS) production, as well as on the retinal edema in diabetic retina. Methods: Intravitreal injections of bevacizumab, TGN-020, or phosphate-buffered saline (PBS) were performed on streptozotocin-induced diabetic rats. Retinal sections were immunostained for anti-glial fibrillary acidic protein (GFAP), anti-AQP4, and anti-VEGF. Protein levels of VEGF from collected retinas were determined by Western blot analysis. In addition, retinal vascular leakage of Evans Blue was observed in the flat-mounted retina from the diabetic rats in the presence or absence of TGN-020. Volumetric changes of rat retinal Müller cells (TR-MUL5; transgenic rat Müller cells) and intracellular levels of ROS were determined using flow cytometry analysis of ethidium fluorescence in the presence or absence of TGN-020 or bevacizumab under physiological and high glucose conditions. Results: In the diabetic retina, the immunoreactivity and protein levels of VEGF were suppressed by TGN-020. AQP4 immunoreactivity was higher than in the control retinas and the expressions of AQP4 were co-localized with GFAP. Similarly to VEGF, AQP4 and GFAP were also suppressed by TGN-020. In the Evans Blue assay, TGN-020 decreased leakage in the diabetic retinas. In the cultured Müller cells, the increase in cell volumes and intracellular ROS production under high glucose condition were suppressed by exposure to TGN-020 as much as by exposure to bevacizumab. Conclusion: TGN-020 may have an inhibitory effect on diabetic retinal edema.