Diabetic corneal alterations, such as delayed epithelial wound healing, edema, recurrent erosions, neuropathy/loss of sensitivity, and tear film changes are frequent but underdiagnosed complications of both type 1 (insulin-dependent) and type 2 (non-insulin-dependent) diabetes mellitus. The disease affects corneal epithelium, corneal nerves, tear film, and to a lesser extent, endothelium, and also conjunctiva. These abnormalities may appear or become exacerbated following trauma, as well as various surgeries including retinal, cataract or refractive. The focus of the review is on mechanisms of diabetic corneal abnormalities, available animal, tissue and organ culture models, and emerging treatments. Changes of basement membrane structure and wound healing rates, the role of various proteinases, advanced glycation end products (AGEs), abnormal growth and motility factors (including opioid, epidermal, and hepatocyte growth factors) are analyzed. Experimental therapeutics under development, including topical naltrexone, insulin, inhibitors of aldose reductase, and AGEs, as well as emerging gene and cell therapies are discussed in detail.