Diabetic retinopathy (DRP) is a retinal disease caused by diabetes mellitus, which is categorized by microvascular lesions present in the retina such as vascular leakage, vascular proliferation, and retinal ischemia. The plan of the present study was to the synthesis of Cyperus rotundus-loaded zinc oxide nanoparticles (CR-ZnONPs) which was confirmed by the various characterization methods such as UV-vis spectroscopy, energy dispersive X-ray analysis, Fourier transform infrared, scanning electron microscope, and X-ray diffraction. Also, the effect of CR-ZnONPs on DRP-induced rats was determined by food intake, fasting blood glucose (FBG), HbA1c, insulin, retina thickness, inner nuclear layer (INL), outer nuclear layer (ONL) thickness, lipid peroxidation (LPO), catalase (CAT), glutathione peroxidase (GPx), and superoxide dismutase (SOD). Furthermore, the status of oxidative stress marker genes (heme oxygenase-1 [HO-1] and nuclear factor erythroid 2-related factor-2 [Nrf2]) and inflammatory marker (procaspase-1, cleaved-caspase-1, interleukin-1β [IL-1β], IL-18, and ASC) expressions were examined by using real-time polymerase chain reaction and Western blot analysis techniques. We noted that the synthesized CR-ZnONPs have a crystalline structure, spherical shape, and present various functional groups. The administration of streptozotocin (STZ)-induced DRP rats were increased in the levels of HbA1c, FBG, food intake, LPO, and reduced levels of insulin, SOD, GPx, and CAT. In addition, the gene and protein expression showed the downregulation of HO-1 and Nrf2 and upregulation of procaspase-1, IL-1β, cleaved-caspase-1, IL-18, and ASC in diabetic rats. Moreover, further histopathological analysis of retinal tissues again confirmed the results of biochemical parameters. In contrast, the DRP rats treated with CR-ZnONPs significantly brought down all the parameters to normal, which indicated that the CR-ZnONPs have better antidiabetic and anti-inflammatory properties. © 2020 Wiley Periodicals LLC.