Aims/hypothesis: Cognitive performance in type 1 diabetes may be compromised as a result of chronic hyperglycaemia. The aim of this study was to investigate the cognitive functioning of patients with type 1 diabetes (including a subgroup with a microvascular complication) and nondiabetic controls, and to assess the relationship between cognition and cerebral grey and white matter volumes. Materials and methods: Twenty-five patients with type 1 diabetes (of whom ten had proliferative retinopathy) and nine nondiabetic controls (matched in terms of sex, age and education) underwent a neuropsychological examination and magnetic resonance imaging of the brain. Fractional brain tissue volumes (tissue volume relative to total intracranial volume) were obtained from each participant. Results: Compared with nondiabetic controls, patients with diabetes performed worse on tests measuring speed of information processing and visuoconstruction; patients with microvascular disease performed worse on the former cognitive domain (p=0.03), whereas patients without complications performed worse on the latter domain (p=0.01). Patients with a microvascular complication had a significantly smaller white matter volume than nondiabetic controls (p=0.04), and smaller white matter volume was associated with worse performance on the domains of speed of information processing and attention and executive function. Conclusions/interpretation: Patients with diabetes demonstrated several subtle neuropsychological deficits, which were found to be related to white matter volume. Since patients with diabetic retinopathy had a smaller white matter volume, this suggests that cognitive decline is at least partly mediated by microvascular disease. This needs to be addressed in future studies.