Background and Objectives: Fenofibrate, a PPAR-α agonist, has been demonstrated to reduce the progression of diabetic retinopathy (DR) and the need for laser treatment in a FIELD (Fenofibrate Intervention and Event Lowering in Diabetes) study. However, in the subgroup of patients without pre-existing DR, there was no significant difference in the progression of DR between the fenofibrate group and the placebo group. In this study, we aim to investigate whether fenofibrate can decrease the risk of incident DR in a population-based cohort study of type 2 diabetic patients in Taiwan. Materials and Methods: A total of 32,253 type 2 diabetic patients without previous retinopathy were retrieved from 892,419 patients in 2001–2002. They were then divided into two groups based on whether they were exposed to fenofibrate or not. The patients were followed until a diagnosis of diabetic retinopathy was made or until the year 2008. Results: With a follow-up period of 6.8 ± 1.5 years and 5.4 ± 2.6 years for 2500 fenofibrate users and 29,753 non-users, respectively, the Cox proportional hazard regression analysis revealed that the hazard ratio (HR) of new onset retinopathy was 0.57 (95% CI 0.57–0.62, p < 0.001). After adjusting for hypertension; the Charlson comorbidity index (CCI); and medications such as angiotensin-converting enzyme inhibitors (ACE-I), angiotensin receptor blockers (ARB), anticoagulants, gemfibrozil, statins, and hypoglycemic agents, the adjusted HR was 0.75 (95% CI 0.68–0.82, p < 0.001). The need for laser treatment has an HR and adjusted HR of 0.59 (95% CI 0.49–0.71, p < 0.001) and 0.67 (95% CI 0.56–0.81, p < 0.001), respectively. Conclusion: Our study showed that the long-term and regular use of fenofibrate may decrease the risk of incident retinopathy and the need for laser treatment in type 2 diabetic patients. Since there are limitations associated with our study, further investigations are necessary to confirm such an association.