To be eligible, the following inclusion criteria (1-6) must be met:

1. Age ≥18 years
2. Diagnosis of diabetes mellitus (type 1 or type 2)
3. Able and willing to provide informed consent.
4. Patient understands that (1) if both eyes are eligible at the time of randomization, one eye will receive intravitreal triamcinolone acetonide and one eye will receive laser, and (2) if only one eye is eligible at the time of randomization and the fellow eye develops DME later, then the fellow eye will not receive intravitreal triamcinolone acetonide if the study eye received intravitreal triamcinolone acetonide (however, if the study eye was assigned to the laser group, then the fellow eye may be treated with the 4mg dose of the study intravitreal triamcinolone acetonide formulation, provided the eye assigned to laser has not received an intravitreal injection; such an eye will not be a "study eye" but since it is receiving study drug, it will be followed for adverse effects).

Exclusion Criteria

A patient is not eligible if any of the following exclusion criteria (7-13) are present:

7. History of chronic renal failure requiring dialysis or kidney transplant.

8. A condition that, in the opinion of the investigator, would preclude participation in the study (e.g., unstable medical status including blood pressure and glycemic control). Note: Patients in poor glycemic control who, within the last 4 months, initiated intensive insulin treatment (a pump or multiple daily injections) or plan to do so in the next 4 months should not be enrolled.

9. Participation in an investigational trial within 30 days of study entry that involved treatment with any drug that has not received regulatory approval at the time of study entry.

10. Known allergy to any corticosteroid or any component of the delivery vehicle.

11. History of systemic (e.g., oral, IV, IM, epidural, bursal) corticosteroids within 4 months prior to randomization or topical, rectal, or inhaled corticosteroids in current use more than 2 times per week.

12. Patient is expecting to move out of the area of the clinical center to an area not covered by another clinical center during the 3 years of the study.

13. Blood pressure > 180/110 (systolic above 180 OR diastolic above 110). Note: If blood pressure is brought below 180/110 by anti-hypertensive treatment, patient can become eligible.

Study Eye Eligibility

Inclusion

1. Best corrected E-ETDRS visual acuity score of ≥ 24 letters (i.e., 20/320 or better) and ≤73 letters (i.e., 20/40 or worse).
2. Definite retinal thickening due to diabetic macular edema based on clinical exam involving the center of the macula.
3. Mean retinal thickness on two OCT measurements ≥250 microns in the central subfield.

4. Media clarity, pupillary dilation, and patient cooperation sufficient for adequate fundus photographs.

   Exclusion

5. Macular edema is considered to be due to a cause other than diabetic macular edema.
6. An ocular condition is present such that, in the opinion of the investigator, visual acuity would not improve from resolution of macular edema (e.g., foveal atrophy, pigmentary changes, dense subfoveal hard exudates, nonretinal condition).
7. An ocular condition is present (other than diabetes) that, in the opinion of the investigator, might affect macular edema or alter visual acuity during the course of the study (e.g., vein occlusion, uveitis or other ocular inflammatory disease, neovascular glaucoma, Irvine-Gass Syndrome, etc.)
8. Substantial cataract that, in the opinion of the investigator, is likely to be decreasing visual acuity by 3 lines or more (i.e., cataract would be reducing acuity to 20/40 or worse if eye was otherwise normal).
9. History of prior treatment with intravitreal corticosteroids.
10. History of peribulbar steroid injection within 6 months prior to randomization.
11. History of focal/grid macular photocoagulation within 15 weeks (3.5 months) prior to randomization.Note: Patients are not required to have had prior macular photocoagulation to be enrolled. If prior macular photocoagulation has been performed, the investigator should believe that the patient may possibly benefit from additional photocoagulation.
12. History of panretinal scatter photocoagulation (PRP) within 4 months prior to randomization.
13. Anticipated need for PRP in the 4 months following randomization.
14. History of prior pars plana vitrectomy.
15. History of major ocular surgery (including cataract extraction, scleral buckle, any intraocular surgery, etc.) within prior 6 months or anticipated within the next 6 months following randomization.
16. History of YAG capsulotomy performed within 2 months prior to randomization.
17. Intraocular pressure ≥25 mmHg.
18. History of open-angle glaucoma (either primary open-angle glaucoma or other cause of open-angle glaucoma.) Note: Angle-closure glaucoma is not an exclusion. A history of ocular hypertension is not an exclusion as long as (1) intraocular pressure is <25 mm Hg, (2) the patient is using no more than one topical glaucoma medication, (3) the most recent visual field, performed within the last 12 months, is normal (if abnormalities are present on the visual field they must be attributable to the patient's diabetic retinopathy), and (4) the optic disc does not appear glaucomatous. If the intraocular pressure is 22 to <25 mm Hg, then the above criteria for ocular hypertension eligibility must be met.
19. History of steroid-induced intraocular pressure elevation that required IOP-lowering treatment.
20. History of prior herpetic ocular infection.
21. Exam evidence of ocular toxoplasmosis.
22. Aphakia.
23. Exam evidence of pseudoexfoliation.
24. Exam evidence of external ocular infection, including conjunctivitis, chalazion, or significant blepharitis.

In patients with only one eye meeting criteria to be a study eye at the time of randomization, the fellow eye must meet the following criteria:

1. Best corrected E-ETDRS visual acuity score ≥19 letters (i.e., 20/400 or better).
2. No prior treatment with intravitreal corticosteroids.
3. Intraocular pressure < 25 mmHg.
4. No history of open-angle glaucoma (either primary open-angle glaucoma or other cause of open-angle glaucoma.)Note: Angle-closure glaucoma is not an exclusion. A history of ocular hypertension is not an exclusion as long as (1) intraocular pressure is <25 mmHg, (2) the patient is using no more than one topical glaucoma medication, (3) the most recent visual field, performed within the last 12 months, is normal (if abnormalities are present on the visual field they must be attributable to the patient's diabetic retinopathy), and (4) the optic disc does not appear glaucomatous. If the intraocular pressure is 22 to <25 mmHg, then the above criteria for ocular hypertension eligibility must be met.
5. No history of steroid-induced intraocular pressure elevation that required IOP-lowering treatment.
6. No exam evidence of pseudoexfoliation.