Cataracts, which are lenticular opacities that may occur at different lens locations, are the leading cause of visual impairment worldwide. Accurate and timely diagnosis can improve the quality of life of cataract patients. In this paper, a feature extraction-based method for grading cataract severity using retinal images is proposed. To obtain more appropriate features for the automatic grading, the Haar wavelet is improved according to the characteristics of retinal images. Retinal images of non-cataract, as well as mild, moderate, and severe cataracts, are automatically recognized using the improved Haar wavelet. A hierarchical strategy is used to transform the four-class classification problem into three adjacent two-class classification problems. Three sets of two-class classifiers based on a neural network are trained individually and integrated together to establish a complete classification system. The accuracies of the two-class classification (cataract and non-cataract) and four-class classification are 94.83% and 85.98%, respectively. The performance analysis demonstrates that the improved Haar wavelet feature achieves higher accuracy than the original Haar wavelet feature, and the fusion of three sets of two-class classifiers is superior to a simple four-class classifier. The discussion indicates that the retinal image-based method offers significant potential for cataract detection.