The early activation of microglia that induces retinal inflammation in DR may serve as a target for therapeutic intervention of DR. Our demonstration that retinal inflammation is attenuated via adenosine receptor A2AAR supports the hypothesis that a mechanism to maintain extracellular concentrations of adenosine important in normal physiology is impaired in DR. Extracellular concentrations of adenosine are regulated by the interplay of equiliberative nucleoside transporter (ENT)s with enzymes of adenosine metabolism including adenosine deaminase-1 (ADA1), adenosine kinase (AK) and CD73. In the vertebrates but not rodents, a macrophage-associated ADA2 is identified. The role of ADA2 is, therefore, understudied as the sequencing probes or antibodies to mouse ADA2 are not available. We identified increased ADA2 expression and activity in human and porcine retinas with diabetes, and in Amadori glycated albumin (AGA)- or hyperglycemia-treated porcine and human microglia. In rodent as well as porcine cells, modulation of TNF-a release is mediated by A2AAR. Quantitative analysis of normal and diabetic porcine retinas reveals that while the expression levels of ADA2, A2AAR, ENT1, TNF-a and MMP9 are increased, the levels of AK are reduced during inflammation as an endogenous protective mechanism. To determine the role of ADA2, we found that AGA induces ADA2 expression, ADA2 activity and TNF-a release, and that TNF-a release is blocked by ADA2-neutralizing antibody or ADA2 siRNA, but not by scrambled siRNA. These results suggest that retinal inflammation in DR is mediated by ADA2, and that the anti-inflammatory activity of A2AAR signaling is impaired in diabetes due to increased ADA2 activity.