The long-term effect of intravitreal Fluocinolone acetonide (FAc) on retinal morphology and function in diabetic macular edema (DME) was investigated. Seventeen eyes of twelve consecutive DME patients, treated by intravitreal FAc, were retrospectively evaluated. Retinal morphology was assessed with central macular thickness (CMT). Retinal function was assessed by best-corrected visual acuity (BCVA) and cone b-wave and photopic negative response (PhNR). The main outcome was a mean change in CMT at month 24. The secondary outcomes were changes in cone b-wave and PhNR at month 24. The incidence of adverse events was also recorded. Mean CMT decreased from 406.52 µm (±138.74) at baseline to 310 µm (±130.39) at 24 months (p = 0.008). No significant changes in the other parameters were found. At baseline, BCVA and PhNR amplitude were negatively correlated (r = −0.55) with CMT. At the end of follow-up, the change in CMT was negatively correlated with baseline CMT (r = −0.53, p = 0.03) and positively correlated with baseline PhNR amplitude (r = 0.58, p < 0.01). A significant, long-term reduction in CMT was observed in DME patients after FAc implant. The anti-edema effect tended to be stronger in patients with the poorest baseline retinal morphology (CMT) and function (PhNR). Structure/function correlations might help to characterize the patients who may benefit from this treatment.