Abstract Purpose To evaluate the changes in the retinal oxygen partial pressure (PO2) following photocoagulation as well as the resulting effect of the laser induced improved oxygenation, on the retinal vessels hemodynamics. Methods Measurements of the partial pressure of oxygen (PO2) distribution within the retina in various animal species using oxygen sensitive microelectrodes and evaluation of changes on the retinal vessels reactivity, following laser treatment, gave additional insights concerning photocoagulation mechanisms. Results Preretinal intervascular PO2 , far away from vessels, remain constant in all retinal areas. Intervascular intraretinal PO2 gradually decreases from both the vitreo‐retinal interface and the choroid towards the mid‐retina. Close to the pigment epithelium, it is significantly higher than at the vitreoretinal interface due to the much higher O2 supply provided by choroidal compaires to retinal circulation. Laser photocoagulation reduces the outer retina O2 consumption and allows O2 diffusion into the inner retina from the choroid raising the PO2 in the inner healthy retinal layers and in the preretinal intervascular normal areas. In this way, laser treatment relieves retinal hypoxia in experimental branch vein occlusion (BRVO). In patients with diabetic retinopathy (DR), the retinal PO2 is also higher in areas previously treated with laser. Following photocoagulation, the resulting reversal of hypoxia, the down‐regulation of the VEGF expression, the retinal vasculature constriction and the improvement of the auto‐regulatory response to physiological stimuli, all affect favorably both the retinal neovascularisation and macular edema. Conclusion Photocoagulation induces an increase of the inner retinal oxygenation resulting to an improvement of the autoregulatory retinal vessels response.