This work examined recent literature on digital image processing in the field of diabetic retinopathy. Algorithms were categorized into 5 steps (preprocessing; localization and segmentation of the optic disk; segmentation of the retinal vasculature; localization of the macula and fovea; localization and segmentation of retinopathy). The variety of outcome measures, use of a gold standard or ground truth, data sample sizes and the use of image databases is discussed. It is intended that our classification of algorithms into a small number of categories, definition of terms and discussion of evolving techniques will provide guidance to algorithm designers for diabetic retinopathy.