Pericyte loss is an early pathologic feature of diabetic retinopathy, consistently present in retinae of diabetic humans and animals. Because pericyte recruitment and endothelial cell survival are controlled, in part, by the angiopoietin/Tie2 ligand/receptor system, we studied the expression of angiopoietin-2 and -1 in relation to the evolution of pericyte loss in diabetic rat retinae, using quantitative retinal morphometry, and in retinae from mice with heterozygous angiopoietin deficiency (Ang-2 LacZ knock-in mice). Finally, recombinant angiopoietin-2 was injected into eyes of nondiabetic rats, and pericyte numbers were quantitated in retinal capillaries. Angiopoietin-1 protein was present in the normal maturing retina and was upregulated 2.5-fold in diabetic retinae over 3 months of diabetes. In contrast, angiopoietin-2 protein was consistently upregulated more than 30-fold in the retinae of diabetic rats, preceding the onset of pericyte loss. Heterozygous angiopoietin-2 deficiency completely prevented diabetes-induced pericyte loss and reduced the number of acellular capillary segments. Injection of angiopoietin-2 into the eyes of normal rats induced a dose-dependent pericyte loss. These data show that upregulation of angiopoietin-2 plays a critical role in the loss of pericytes in the diabetic retina.