Aims/hypothesis: In addition to nephropathy, retinopathy and peripheral neuropathy, a microvascular complication of type 1 diabetes that may be tentatively referred to as 'diabetic encephalopathy' has gained increasing attention. There is growing evidence that lowered cognitive performance in patients with type 1 diabetes is related to chronic hyperglycaemia rather than recurrent episodes of severe hypoglycaemia, as previously speculated. The aim of our study was to use magnetic resonance imaging (MRI) to establish whether long-term hyperglycaemia, resulting in advanced retinopathy, contributes to structural changes in the brain (reduced grey matter). Subjects, materials and methods: We applied voxel-based morphometry on magnetic resonance images to compare grey matter density (GMD) between three groups of participants. GMD is used as a marker of cortical atrophy. We compared 13 type 1 diabetic patients with a microvascular complication (i.e. proliferative retinopathy) with 18 type 1 diabetic patients who did not have retinopathy in order to assess the effects of microvascular changes on GMD. Both patient groups were compared with 21 healthy control subjects to assess the effect of diabetes in itself. Results: Patients with diabetic retinopathy showed reduced GMD in the right inferior frontal gyrus and right occipital lobe compared both with patients without retinopathy and with healthy controls (p<0.05). Conclusions/interpretation: Our data show that patients with type 1 diabetes, who, as a consequence of chronic hyperglycaemia, had developed advanced retinopathy, also showed increased focal cortical atrophy on brain MRI.