Retinopathy continues to progress even when diabetic patients try to control their blood sugar, but the molecular mechanism of this ‘metabolic memory’ phenomenon remains elusive. Retinal mitochondria remain damaged and vicious cycle of free radicals continues to self-propagate. DNA methylation suppresses gene expression, and diabetes activates DNA methylation machinery. Our aim was to investigate the role of DNA methylation in continued compromised mitochondrial dynamics and genomic stability in diabetic retinopathy. Using retinal endothelial cells, incubated in 20 mM glucose for four days, followed by 5 mM glucose for four days, and retinal microvessels from streptozotocin-induced diabetic rats in poor glycemia for four months, followed by normal glycemia for four additional months, DNA methylation of mitochondrial fusion and mismatch repair proteins, Mfn2 and Mlh1 respectively, was determined. Retinopathy was detected in trypsin-digested microvasculature. Re-institution of good glycemia had no beneficial effect on hypermethylation of Mfn2 and Mlh1 and retinal function (electroretinogram), and the  retinopathy continued to progress. However, intervention of good glycemia directly with DNA methylation inhibitors (Azacytidine or Dnmt1-siRNA), prevented Mfn2 and Mlh1 hypermethylation, and ameliorated retinal dysfunction and diabetic retinopathy. Thus, direct regulation of DNA methylation can prevent/reverse diabetic retinopathy by maintaining mitochondrial dynamics and DNA stability, and prevent retinal functional damage.