Diabetic retinopathy (DR) is a leading cause of blindness worldwide with limited treatment options. Mesenchymal stem cell-derived small extracellular vesicles (MSC-sEVs) hold promise as a cell-free therapy for retinal diseases. In this study, we present evidence that the intravitreal injection of MSC-sEVs improved retinal function and alleviated retinal apoptosis, inflammation, and angiogenesis in both db/db mice and streptozotocin-induced diabetic rats. Mechanistically, hyperglycemia-induced activation of hypoxia-inducible factor-1α (HIF-1α) inhibited the tripartite motif 21 (TRIM21)-mediated ubiquitination and degradation of enhancer of zeste homologue 2 (EZH2), ultimately resulting in the downregulation of peroxisome proliferator-activated receptor-γ coactivator-1α (PGC-1α) through EZH2-induced methylation modification. The presence of miR-5068 and miR-10228 in MSC-sEVs targeted the HIF-1α/EZH2/PGC-1α pathway. The blockade of miR-5068 and miR-10228 abolished the retinal therapeutic effects of MSC-sEVs. Additionally, we engineered MSC-sEVs with elevated levels of miR-5068 and miR-10228 to enhance retinal repair efficiency. Together, our findings provide novel insights into the mechanism underlying DR progress and highlight the potential of MSC-sEVs, especially engineered MSC-sEVs, as a therapeutic option for DR.