Aims We investigated the association between alcohol consumption and diabetic retinopathy and deterioration of visual acuity in individuals with Type 2 diabetes. Methods We conducted a cohort analysis of 1239 participants with Type 2 diabetes aged 55-81 years enrolled in the AdRem study, a sub-study of the Action in Diabetes and Vascular Disease: Preterax and Diamicron MR Controlled Evaluation (ADVANCE) trial. Current and past consumption of wine, spirits and beer was measured by self-report. Moderate and heavy alcohol consumption was defined as 1-14 and > 14 drinks/week, respectively. Diabetic retinopathy, measured by mydriatic stereoscopic seven-field retinal photography, was defined by a 2-step progression in the Early Treatment of Diabetic Retinopathy Study (ETDRS) score or the presence of any retinal vascular lesions. Deterioration of visual acuity was defined by a decrease of two lines in best vision in either eye, measured corrected, or through a pinhole using a Snellen chart. Results In a mean follow-up of 5.5 years, we identified 182 participants with a 2-step progression in the ETDRS score, 640 participants with the presence of any retinal vascular lesions and 693 participants with a deterioration of visual acuity. Current moderate consumption of alcohol, compared with no current consumption, was not associated with presence or progression of diabetic retinopathy; however, it was associated with higher risk of deterioration of visual acuity (multivariable-adjusted OR 1.83; 95% CI 1.34-2.48; P < 0.001). Conclusions Alcohol consumption is associated with increased risk of deterioration of visual acuity, but not with retinopathy in individuals with Type 2 diabetes.