Diabetic retinopathy is a disease that can cause vision loss leading to blindness in people with diabetes. Improved methods to treat and prevent vision loss in diabetic patients are in high demand owing to limited current treatment procedures. Herein, we report a new class of transglutaminase 2 (TGase2) inhibitors for the treatment of diabetic retinopathy based on 7-aminoquinoline-5,8-dione derivatives. 7-Amino-2-phenylquinoline-5,8-dione 11 and 7-amino-2-{4-[(1-methylpiperidin-4-yl)oxy]phenyl}quinoline-5,8-dione 23 exhibited potent inhibitory activities against TGase2 in a fibrinogen array-based on-chip TGase2 activity assay and in an in situ assay in human retinal microvascular endothelial cells, with IC50 values of 5.88 and 1.12 μM in vitro, and 0.09 and 0.07 μM in situ, respectively. Pharmacokinetically favorable 7-amino-2-{4-[(1-isopropylpiperidin-4-yl)oxy] phenyl}quinoline-5,8-dione 22 inhibited vascular leakage in the retinas of streptozotocin-induced diabetic mice via oral administration. Results from the AL5 kinetic assay and a molecular docking study suggest that the inhibitors may bind to TGase2 remote from the active site.