Intestinal lymphatic, known as lacteal, plays a critical role in maintaining intestinal homeostasis by regulating several key functions, including the absorption of dietary lipids, immune cell trafficking, and interstitial fluid balance in the gut. The absorption of dietary lipids relies on lacteal integrity, mediated by button-like and zipper-like junctions. Although the intestinal lymphatic system is well studied in many diseases, including obesity, the contribution of lacteals to the gut-retinal axis in type 1 diabetes (T1D) has not been examined. Previously, we showed that diabetes induces a reduction in intestinal angiotensin-converting enzyme 2 (ACE2), leading to gut barrier disruption. However, when ACE2 levels are maintained, a preservation of gut barrier integrity occurs, resulting in less systemic inflammation and a reduction in endothelial cell permeability, ultimately retarding the development of diabetic complications, such as diabetic retinopathy. Here, we examined the impact of T1D on intestinal lymphatics and circulating lipids and tested the impact of intervention with ACE-2-expressing probiotics on key aspects of gut and retinal function. Akita mice with 6 months of diabetes were orally gavaged LP-ACE2 (3x/week for 3 months), an engineered probiotic (Lactobacillus paracasei; LP) expressing human ACE2. After three months, immunohistochemistry (IHC) was used to evaluate intestinal lymphatics, gut epithelial, and endothelial barrier integrity. Retinal function was assessed using visual acuity, electroretinograms, and enumeration of acellular capillaries. LP-ACE2 significantly restored intestinal lacteal integrity as assessed by the increased expression of lymphatic vessel hyaluronan receptor 1 (LYVE-1) expression in LP-ACE2-treated Akita mice. This was accompanied by improved gut epithelial (Zonula occludens-1 (ZO-1), p120-catenin) and endothelial (plasmalemma vesicular protein -1 (PLVAP1)) barrier integrity. In Akita mice, the LP-ACE2 treatment reduced plasma levels of LDL cholesterol and increased the expression of ATP-binding cassette subfamily G member 1 (ABCG1) in retinal pigment epithelial cells (RPE), the population of cells responsible for lipid transport from the systemic circulation into the retina. LP-ACE2 also corrected blood-retinal barrier (BRB) dysfunction in the neural retina, as observed by increased ZO-1 and decreased VCAM-1 expression compared to untreated mice. LP-ACE2-treated Akita mice exhibit significantly decreased numbers of acellular capillaries in the retina. Our study supports the beneficial role of LP-ACE2 in the restoration of intestinal lacteal integrity, which plays a key role in gut barrier integrity and systemic lipid metabolism and decreased diabetic retinopathy severity.