Diabetic retinopathy (DR) is a neurovascular complication of diabetes, driven by an intricate network of cellular and molecular mechanisms. This study sought to explore the mechanisms by investigating the role of 12-hydroxyeicosatetraenoic acid (12-HETE), its receptor GPR31, and microRNA (miR-29) in the context of DR, specifically focusing on their impact on Müller glial cells. We found that 12-HETE activates Müller cells (MCs), elevates glutamate production, and induces inflammatory and oxidative responses, all of which are instrumental in DR progression. The expression of GPR31, the receptor for 12-HETE, was prominently found in the retina, especially in MCs and retinal ganglion cells, and was upregulated in diabetes. Interestingly, miR29 showed potential as a protective agent, mitigating the harmful effects of 12-HETE by attenuating inflammation and oxidative stress, and restoring the expression of pigment epithelium-derived factor (PEDF). Our results underline the central role of 12-HETE in DR progression through activation of a neurovascular toxic pathway in MCs and illuminate the protective capabilities of miR-29, highlighting both as promising therapeutic targets for the management of DR.