Aims/hypothesis. Universal worsening of retinopathy after starting insulin therapy in Type 2 diabetes has been suggested in previous work. Methods. We studied 294 such patients for up to 5 years to evaluate retinal changes and define the factors affecting progression of retinopathy. Yearly retinal photographs were graded using the EURODIAB system. Results. Prior to insulin therapy, 26.2% (77/294) of the patients had minimal non-proliferative diabetic retinopathy (NPDR), 3.7% (n=11) had moderate NPDR and 1% (n=3) had severe NPDR. Over the first 3 years of insulin therapy, significant progression occurred in 36 subjects (12.6%). This comprised 5/193 (2.6%) without any retinopathy at baseline, 22/77 (28.5%) with minimal NPDR and 6/11 with moderate NPDR (54.5%) (χ 2 =56.1, p<0.001). In a control group of 70 patients who remained on oral hypoglycaemic agents, nine patients had significant worsening of retinopathy over 3 years. Over 5 years, 22/127 (17.3%) of patients (9/95 without and 13/32 with retinopathy at baseline [χ 2 =16.2, p<0.001]) had significant progression of retinopathy. Higher baseline HbA 1 c (p=0.002) and lower initial decrease in HbA 1 c (p=0.007) were each independent predictors of greater retinopathy progression over this period. There was no significant worsening of visual acuity in patients whose retinopathy progressed. Conclusions/interpretation. After initiation of insulin treatment in Type 2 diabetes, clinically significant worsening of retinopathy over a 3-year period was uncommon in those with no retinopathy (2.6%) but occurred in 31.8% of patients with any retinopathy at baseline. The risk of serious worsening of retinopathy after insulin therapy is started in all patients with Type 2 diabetes may have been previously overestimated.