Dysregulated sphingolipid metabolism causes neuronal cell death and is associated with insulin resistance and diseases. Thus, we hypothesized that diabetes-induced changes in retinal sphingolipid metabolism may contribute to neuronal pathologies in diabetic retinopathy. ESI-MS/MS was used to measure ceramide content and ceramide metabolites in whole retinas after 2, 4, and 8 weeks of streptozotocin-induced diabetes. After 4 and 8 weeks of diabetes, a ∼30% decrease in total ceramide content was observed, concomitant with a significant ∼30% increase in glucosylceramide levels in fed diabetic rats compared with their age-matched controls. Acute insulin therapy as well as a short-term lowering of glucose via fasting did not affect the increase in glucosylceramide composition. To assess the putative biological consequences of the increase in glucosylceramide composition, R28 retinal neurons were treated with glucosylceramide synthase inhibitors. Inhibiting glycosphingolipid metabolism increased insulin sensitivity in retinal neurons. Glycosphingolipid inhibitors augmented insulin-stimulated p70 S6kinase activity in the presence of inhibitory concentrations of high glucose or glucosamine. Inhibition of glycosphingolipid synthesis also suppressed glucosamine- and interleukin-1β–induced death. Consistent with these inhibitor studies, pharmacological accumulation of glycosphingolipids increased activation of the endoplasmic reticulum stress response, a putative modulator of insulin resistance and neuronal apoptosis. It is speculated that an increase in glucosylceramide, and possibly higher-order glycosphingolipids, could contribute to the pathogenesis of diabetic retinopathy by contributing to local insulin resistance, resulting in neuronal cell death. Thus, dysfunctional glycosphingolipid metabolism may contribute to metabolic stress in diabetes, and therapeutic strategies to restore normal sphingolipid metabolism may be a viable approach for treatment of diabetic retinopathy.