Diabetic retinopathy is a frequent complication of longstanding diabetes, which comprises a complex interplay of microvascular abnormalities and neurodegeneration. Zebrafish harboring a homozygous mutation in the pancreatic transcription factor pdx1 display a diabetic phenotype with survival into adulthood, and are therefore uniquely suitable among zebrafish models for studying pathologies associated with persistent diabetic conditions. We have previously shown that, starting at three months of age, pdx1 mutants exhibit not only vascular but also neuro-retinal pathologies manifesting as photoreceptor dysfunction and loss, similar to human diabetic retinopathy. Here, we further characterize injury and regenerative responses and examine the effects on progenitor cell populations. Consistent with a negative impact of hyperglycemia on neurogenesis, stem cells of the ciliary marginal zone show an exacerbation of aging-related proliferative decline. In contrast to the robust Müller glial cell proliferation seen following acute retinal injury, the pdx1 mutant shows replenishment of both rod and cone photoreceptors from slow-cycling, neurod-expressing progenitors which first accumulate in the inner nuclear layer. Overall, we demonstrate a diabetic retinopathy model which shows pathological features of the human disease evolving alongside an ongoing restorative process that replaces lost photoreceptors, at the same time suggesting an unappreciated phenotypic continuum between multipotent and photoreceptor-committed progenitors.