To determine the predictive value of the microcirculation of the optic nerve head by swept-source optical coherence tomography angiography for identifying individuals with high risk of diabetic retinopathy (DR) progression and diabetic macular edema (DME) development. Prospective observational cohort study. A total of 946 patients (1879 eyes) with type 2 diabetes mellitus were recruited who had no DR or mild nonproliferative DR at baseline, and no DME. All subjects underwent 3×3 mm swept-source optical coherence tomography angiography centered on the optic nerve head to generate angiograms in 4 layers: radial peripapillary plexus, superficial retinal capillary plexus (SCP), deep retinal capillary plexus, and choriocapillaris (CC). The CC flow deficit percentage (CC FD%), vessel density (VD), and perfusion density (PD) were quantified. During the 3 consecutive years of follow-up, 312 eyes (16.60%) experienced DR progression and 115 eyes (6.12%) developed DME. The DR progression was related to a lower VD of the SCP (relative risk per standard deviation decrease, 95% confidence interval): 1.30, 1.14-1.48; P < .001), a lower PD of the SCP (1.41, 1.24-1.60; P < .001), a lower VD of the radial peripapillary plexus (1.23, 1.08-1.40; P=.002), and an elevated CC FD% (1.62, 1.40-1.88; P < .001). The DME occurrence was associated with a lower VD of SCP (1.35, 1.09-1.66; P=.005), a lower PD of SCP (1.29, 1.05-1.59; P=.016), and a higher CC FD% (1.29, 1.03-1.61; P < .001). The CC FD% significantly improved the predictive power, with the increase of the C-statistic for DR progression and DME occurrence by 3.83% (P=.002) and 5.24% (P < .001), respectively. This study provides the first longitudinal evidence suggesting that peripapillary CC FD% can improve the prediction of DR progression and DME development beyond traditional risk factors.