Diabetic retinopathy (DR) is a multifactorial microvascular disease induced by hyperglycemia and subsequent metabolic abnormalities. The resulting cell stress causes a sequela of events that ultimately can lead to severe vision impairment and blindness. The early stages are characterized by activation of glia and loss of pericytes, endothelial cells (EC) and neuronal cells. The integrity of the retinal microvasculature becomes affected, and, as a possible late response, macular edema may develop as a common reason for vision loss in patients with non-proliferative DR. Moreover, the local ischemia can trigger vasoproliferation leading to vision-threating proliferative DR (PDR) in humans. Available treatment options include control of metabolic and hemodynamic factors. Timely intervention of advanced DR stages with laser photocoagulation, intraocular anti-vascular endothelial growth factor (VEGF) or glucocorticoid drugs can reduce vision loss. As the pathology involves cell loss of both the vascular and neuroglial compartments, cell replacement strategies by stem and progenitor cells have gained considerable interest in the past years. Compared to other disease entities, so far little is known about the efficacy and potential mode of action of cell therapy in treatment of DR. In preclinical models of DR different cell types have been applied ranging from embryonic or induced pluripotent stem cells, hematopoietic stem cells, and endothelial progenitor cells to mesenchymal stromal cells (MSC). The latter cell population can combine various modes of action (MoA), thus they are among the most intensely tested cell types in cell therapy. The aim of this review is to discuss the rationale for using MSC as potential cell therapy to treat DR. Accordingly, we will revise identified MoA of MSCs and speculate how these may support the repair of the damaged retina.