OBJECTIVE Type 1 diabetes in youth and community controls were compared on functional outcomes. Relationships were examined between psychosocial variables at diagnosis and functional outcome 12 years later. RESEARCH DESIGN AND METHODS Participants were subjects with type 1 diabetes (n = 110, mean age 20.7 years, SD 4.3) and control subjects (n = 76, mean age 20.8 years, SD 4.0). The measures used included the Youth Self-Report and Young Adult Self-Report and a semi-structured interview of functional outcomes. Type 1 diabetes participants also provided information about current diabetes care and metabolic control from diagnosis. RESULTS Type 1 diabetes participants and control subjects reported similar levels of current well-being but for the youth with type 1 diabetes, the mental health referral rates over the previous 12 years were higher by 19% and school completion rates were lower by 17%. Over one-third of clinical participants were not currently receiving specialist care and this group had higher mental health service usage in the past (61 vs. 33%) and lower current psychosocial well- being. Within the type 1 diabetes group, behavior problems, high activity, and low family cohesion at diagnosis predicted lower current well-being, but were not associated with metabolic control history. Poorer metabolic control was associated with higher mental health service usage. CONCLUSIONS Type 1 diabetes participants report similar levels of current psychosocial well-being compared with control subjects, but higher levels of psychiatric morbidity since diagnosis and lower school completion rates. Psychiatric morbidity was associated with poor metabolic control and failure to transition to tertiary adult diabetes care.