A variety of studies have shown that flicker-induced vasodilatation is reduced in patients with diabetes. It is, however, unclear whether reduced neural activity or abnormal neurovascular coupling is the reason for this phenomenon. In the present study, we hypothesized that retinal neurovascular dysfunction precedes neural dysfunction in patients with early type 1 diabetes. In the present study, 50 patients with type 1 diabetes without retinopathy and 50 healthy age- and sex-matched control subjects were included. The retinal vascular response to flicker stimulation was measured using the dynamic Retinal Vessel Analyzer. In addition, the response in retinal blood velocity to flicker stimulation as assessed with laser Doppler velocimetry was studied in a subgroup of patients. Pattern electroretinography (ERG) was used to measure neural retinal function. The flicker responses of both retinal arteries and veins were significantly reduced in patients with diabetes (veins in the diabetic group: 3.5 ± 2.3% versus healthy control group: 4.6 ± 2.0%; P = 0.022 between groups, whereas arteries in the diabetic group: 2.0 ± 2.7% versus healthy control group: 3.8 ± 1.7%; P < 0.001 between groups). Likewise, the response of retinal blood velocity was reduced in patients with diabetes, although adequate readings could only be obtained in a subgroup of subjects (diabetic group [n = 22]: 19 ± 7%; healthy control group [n = 24]: 43 ± 19% P < 0.001 between groups). The parameters of pattern ERG were not different between the two groups. The study confirms that flicker responses are reduced early in patients with type 1 diabetes. This is seen before alterations in pattern ERG indicating abnormal neurovascular coupling.