Diabetic retinopathy (DR) is the leading cause of visual impairment, particularly in the proliferative form (proliferative DR [PDR]). The impact of the PDR microenvironment on microglia, which are the resident immune cells in the central nervous system, and the specific pathological changes it may induce remain unclear. This study aimed to investigate the role of microglia in the progression of PDR under hypoxic and inflammatory conditions. We performed a comprehensive gene expression analysis using human-induced pluripotent stem cell-derived microglia under different stimuli (dimethyloxalylglycine (DMOG), lipopolysaccharide (LPS), and DMOG + LPS) to mimic the hypoxic inflammatory environment characteristic of PDR. Principal component analysis revealed distinct gene expression profiles, with 76 genes synergistically upregulated under combined stimulation. Notably, prostaglandin-endoperoxide synthase 2 (encoding cyclooxygenase (COX)-2) exhibited the most pronounced increase, leading to elevated prostaglandin E2 (PGE2) levels and driving pathological angiogenesis and inflammation via the COX-2/PGE2/PGE receptor 2 signaling axis. Additionally, the upregulation of the fibrogenic genes snail family transcriptional repressor 1 and collagen type I alpha 1 chain suggested a role for microglia in fibrosis. These findings underscore the critical involvement of microglia in PDR and suggest that targeting both the angiogenic and fibrotic pathways may present new therapeutic strategies for managing this condition.