One of the major complications of diabetes is the alteration of the blood-retinal barrier, leading to retinal edema and consequent vision loss. The aim of this study was to evaluate the role of the urokinase plasminogen activator (uPA)/uPA receptor (uPAR) system in the regulation of retinal vascular permeability. Biochemical, molecular, and histological techniques were used to examine the role of uPA and uPAR in the regulation of retinal vascular permeability in diabetic rats and cultured retinal endothelial cells. The increased retinal vascular permeability in diabetic rats was associated with a decrease in vascular endothelial (VE) -cadherin expression in retinal vessels. Treatment with the uPA/uPAR-inhibiting peptide (Å6) was shown to reduce diabetes-induced permeability and the loss of VE-cadherin. The increased permeability of cultured cells in response to advanced glycation end products (AGEs) was significantly inhibited with Å6. Treatment of endothelial cells with specific matrix metalloproteinases or AGEs resulted in loss of VE-cadherin from the cell surface, which could be inhibited by Å6. uPA/uPAR physically interacts with AGEs/receptor for advanced glycation end products on the cell surface and regulates its activity. uPA and its receptor uPAR play important roles in the alteration of the blood-retinal barrier through proteolytic degradation of VE-cadherin. The ability of Å6 to block retinal vascular permeability in diabetes suggests a potential therapeutic approach for the treatment of diabetic macular edema.—Navaratna, D., Menicucci, G., Maestas, J., Srinivasan, R., McGuire, P., Das, A. A peptide inhibitor of the urokinase/urokinase receptor system inhibits alteration of the blood-retinal barrier in diabetes.