AIM: To investigate the protective effect of human umbilical cord mesenchymal stem cells (hUCMSCs) modified by the LIF gene on the retinal function of diabetic model rats and preliminarily explore the possible mechanism. METHODS: A stably transfected cell line of hUCMSCs overexpressing leukemia inhibitory factor (LIF) was constructed. Overexpression was verified by fluorescent quantitative polymerase chain reaction (qPCR). Forty-eight adult Sprague-Dawley rats were randomly divided into a normal control group (group A), streptozotocin-induced diabetic control group (group B), diabetic rats at 3mo injected with empty vector-transfected hUCMSCs (group C) or injected with LIF-hUCMSCs (group D). Four weeks after the intravitreal injection, analyses in all groups included retinal function using flash electroretinogram (F-ERG), retinal blood vessel examination of retinal flat mounts perfused with fluorescein isothiocyanate-dextran (FITC-dextran), and retinal structure examination of sections using hematoxylin and eosin staining. Expression levels of adiponectin (APN), high-sensitivity C-reactive protein (hs-CRP), and neurotrophin-4 (NT-4) in each group was detected using immunohistochemistry, PCR, Western blotting, and ELISA, respectively. RESULTS: A stable transgenic cell line of LIF-hUCMSCs was constructed. F-ERG and FITC-dextran examinations revealed no abnormalities of retinal structure and function in group A, severe damage of the retinal blood vessels and function in group B, and improved retinal structure and function in group C and especially group D. qPCR, ELISA, and Western blot analyses revealed progressively higher APN and NT-4 expression levels in groups B, C, and D than in group A. hs-CRP expression was significantly higher in group B than in groups A, C, and D, and was significantly higher in group C than in group D (P<0.05). CONCLUSION: LIF-hUCMSCs protect the retina of diabetic rats by upregulating APN and NT-4 expression and downregulating hs-CRP expression in the retina.