Type 2 diabetes is a heterogeneous disease that can be subdivided on the basis of β-cell function and insulin sensitivity. We investigated the presence, incidence, and progression of diabetic retinopathy (DR) according to subtypes of type 2 diabetes. In a national cohort, we identified three subtypes of type 2 diabetes: classical, hyperinsulinemic, and insulinopenic type 2 diabetes, based on HOMA2 measurements. From the Danish Registry of Diabetic Retinopathy we extracted information on level of DR. We used several national health registries to link information on comorbidity, medications, and laboratory tests. We found individuals with hyperinsulinemic type 2 diabetes were less likely to have DR at entry date compared with those with classical type 2 diabetes, whereas individuals with insulinopenic type 2 diabetes were more likely to have DR. In multivariable Cox regression analysis, individuals with hyperinsulinemic type 2 diabetes had a decreased risk of both incidence and progression of DR compared to those with classical type 2 diabetes. We did not find any clear difference in risk of incident or progression of DR in individuals with insulinopenic compared to classical type 2 diabetes. These findings indicate that subcategorization of type 2 diabetes is important in evaluating the risk of DR.