Diabetic retinopathy is one of the worst complications of diabetes and it is treated by invasive method. We prepared a surface modified poly (D, L-lactide-co-glycolide) i.e. PLGA nanoparticles for delivery of pioglitazone-a peroxisome proliferator-activated receptor-gamma agonist to posterior segment of the eye by topical administration. The present study investigated two grades of PLGA viz. 75:25 and 50:50. Surface modification was performed using polysorbate 80. Nanoparticles were prepared by single emulsion solvent evaporation method and optimized by using 3-factor 3-level Box-Behnken statistical design. Mean particle size, PDI and entrapment efficiency for optimized batch of PLGA 75:25 was found to be 163.23 nm, 0.286 and 91%, whereas; for PLGA 50:50 it was 171.7 nm, 0.280 and 93% respectively. DSC confirms the molecular dispersion of drug in polymer. In vitro release study showed biphasic drug release pattern with 58.48 ± 1.38% and 74.17 ± 1.38% cumulative drug release by PLGA 75:25 and 50:50 nanoparticles at the end of 10h. The release profile of pioglitazone from nanoparticles appeared to fit best with Higuchi model. In vivo study on rat showed dose dependent reduction in vascular endothelial growth factor concentration in vitreous fluid. The study reveals significance of peroxisome proliferator-activated receptor-gamma in management of diabetic retinopathy.