Diabetic retinopathy is one of the leading causes of blindness in the developed world. With optical coherence tomography (OCT), it has become possible to image the retina in vivo and to measure retinal oedema by measuring retinal thickness (RT) with high accuracy. The purpose of this study was to identify the retinal layer predominantly affected in eyes with subclinical and clinical macular oedema in type 2 diabetics. One hundred and ninety-four patients with mild nonproliferative diabetic retinopathy (ETDRS levels 20/35) were examined with Cirrus spectral-domain OCT at the baseline visit. Automated segmentation of the retinal layers of the eyes with subclinical and clinical macular oedema was compared with a sample of 31 eyes from diabetic patients with normal OCT and an age-matched control group of 58 healthy eyes. From the 194 eyes in the study, 62 had subclinical macular oedema and 12 had clinical macular oedema. The highest increases in RT were found in the inner nuclear layer (INL; 33.6% in subclinical macular oedema and 81.8% in clinical macular oedema). Increases were also found in the neighbouring layers. Thinning of the retina was seen in the retinal nerve fibre, ganglion cells and inner plexiform layers in the diabetic eyes without macular oedema. The increase in RT occurring in diabetic eyes with macular oedema is predominantly located in the INL but extends to neighbouring retinal layers indicating that it may be due to extracellular fluid accumulation.