Diabetic retinopathy (DR) is a major microvascular complication of diabetes mellitus that leads to significant vision loss. Isoliquiritigenin (ISL) is a bioactive flavonoid found in the root of licorice with reported anti-oxidant and anti-inflammatory activities. In the present study, we evaluated the effect of ISL administration on diabetes-induced retinal injury. Diabetes was induced in male Sprague-Dawley rats using single intraperitoneal streptozotocin (STZ, 50 mg/kg) injection. Diabetic rats showed up-regulated retinal miR-195, reduced retinal levels of SIRT-1, and increased levels of oxidative stress, nuclear factor-κB (NF-κB), inflammatory cytokines, and endothelin-1. Moreover, histopathological and electron microscopy studies revealed distorted retinal layers and reduced number of ganglion cells. Oral administration of ISL (20 mg/kg/day) to diabetic rats for 8 weeks improved diabetes-induced retinal injury via down-regulation of miR-195, restoration of retinal SIRT-1 level, attenuation of oxidative stress, inflammation, and endothelial damage as well as preservation of retinal normal histology and ultrastructure. In conclusion, our results showed that ISL could be a promising therapeutic intervention to prevent the development and progression of DR. It also suggested that the miR-195/SIRT-1/NF-κB pathway may contribute to ISL treatment-induced beneficial effects.