Previous research suggests that children with insulin dependent diabetes (IDDM) show selective impairments on neuropsychological tests, with those developing IDDM before 5 years of age appearing to be the most affected. The effect of hypoglycaemia on the developing brain has been suggested as a possible risk factor as has the disruptive effect of chronic hyperglycaemia on myelinisation. A cohort of children (n = 124) with newly diagnosed IDDM, managed at The Royal Children's Hospital, Melbourne has been assembled and evaluated 3 months post diagnosis on standardised tests of general intelligence, attention, memory, new learning, executive functions, and educational achievement. The performance of the children with IDDM has been compared with that of a demographically representative control group (n = 129) of healthy children. At this baseline assessment, the findings strongly support the hypothesis that the neuropsychological and educational profiles of newly diagnosed children are not different from that of controls early in the course of the illness. Both groups will be reassessed 2 and 5 years after the initial evaluation when it is hypothesised that children with diabetes will perform more poorly. Parameters of the illness, such as age of onset, major metabolic crises, and history of glycaemic control will be related to the test performance of the children with IDDM to identify specific risk factors for neuropsychological and educational sequelae in that population.