The ubiquitin-proteasome system (UPS) is the mainstay of protein quality control which regulates cell cycle, differentiation and various signal transduction pathways in eukaryotic cells. The timely and selective degradation of surplus and/or aberrant proteins by the UPS is essential for normal cellular physiology. Any disturbance, delay or exaggeration in the process of selection, sequestration, labeling for degradation and degradation of target proteins by the UPS will compromise cellular and tissue homeostasis. High blood glucose or hyperglycemia caused by diabetes disrupts normal vascular function in several target organs including the retina and kidney resulting in the development of diabetic retinopathy (DR) and diabetic nephropathy (DN). We and others have shown that hyperglycemia and oxidative stress modulate UPS activity in the retina and kidney. The majority of studies have focused on the kidney and provided insights into the contribution of dysregulated UPS to microvascular damage in DN. The eye is a unique organ in which a semi-fluid medium, the vitreous humor, separates the neural retina and its anastomosed blood vessels from the semi-solid lens tissue. The complexity of the cellular and molecular components of the eye may require a normal functioning and well tuned UPS for healthy vision. Altered UPS activity may contribute to the development of retinal microvascular complications of diabetes. A better understanding of the molecular nature of the ocular UPS function under normal and diabetic conditions is essential for development of novel strategies targeting its activity. This review will discuss the association of retinal vascular cell UPS activity with microvascular damage in DR with emphasis on alterations of the PA28 subunits of the UPS.