Purpose: To assess the relationship of retinal vessel caliber with diabetes and diabetic retinopathy (DR). Design: Population-based cross-sectional analysis of the Blue Mountains Eye Study, Australia (n = 3,654, age ≥49 years). Methods: Diabetes was defined as physician-diagnosed or fasting blood glucose ≥ 7.0 mmol/l; impaired fasting glucose as fasting glucose 6.1 to 6.9 mmol/l. DR was graded from retinal photographs. Retinal vessel caliber was measured from digitized images. Results: After controlling for age, gender, blood pressure, and other factors, mean retinal venular caliber was significantly wider in participants with moderate-severe nonproliferative DR (severe 262.7 μm; moderate 236.7 μm) than in nondiabetic participants (221.9 μm) or participants with diabetes but no DR (221.2 μm) (P < .0001). Mean retinal arteriolar caliber was significantly wider in participants with diabetes (193.5 μm) than in nondiabetic participants (190.2 μm) (P < .01). Conclusions: Increasing severity of DR in persons with diabetes is associated with widening of retinal venular caliber.