Abstract Introduction Patients with diabetes distress (DD) experience poorer health outcomes than patients with diabetes mellitus (DM) who do not experience DD. However, few studies have examined whether treatment for DD delivered by a psychologist embedded in a multi-disciplinary team (MDT) improves not only psychological health, but glycaemic control and other physical health outcomes, especially in low socioeconomic populations. Method: This study examined the impact of intervention by a clinical psychologist, as part of an outpatient MDT at a tertiary referral hospital diabetes service, on glycaemic control, emergency presentations and hospital admissions, diabetes distress, depression, anxiety and stress symptoms. Inclusion criteria were high DD indicated by a Problem Areas in Diabetes (PAID) questionnaire score ≥ 40, together with either 1) recent diabetes-related hospitalisation, 2) HbA1c >8% or 3) conflict over diabetes management with family or healthcare professionals, such as difficulty aligning diabetes management goals. Measures at baseline and treatment completion were the PAID questionnaire, the 21-item Depression, Anxiety, Stress Scale (DASS21), HbA1c, and number of emergency department presentations and hospital admissions in the three months before and after treatment commencement. Participants were assessed and treated by a clinical psychologist in addition to existing treatment by the MDT (which could include a diabetes educator, endocrinologist and dietician). Psychological treatment was individually determined, based on participants’ needs, and included cognitive therapy for health beliefs, mindfulness, distress tolerance, behavioural activation, problem solving, interpersonal effectiveness, Cognitive Behaviour Therapy (CBT) for disordered eating, and blood glucose awareness training. CBT for depression or anxiety was used as an adjunct where clinically indicated. Length of treatment and frequency of sessions varied depending on individual needs. Results Participants were 67 outpatients with DM aged 16-82 years, (72% female) in an area with a high prevalence of socio-economic disadvantage. Forty five patients had Type 1DM, 21 had Type 2DM and 2 had other or undefined DM type. Mean HbA1c decreased from 9.25% pre-treatment to 8.27% in the three months post treatment (p<0.001). Emergency department presentations halved (p<0.05). All psychological variables showed significant improvement: DD measured by PAID decreased from 57.5 to 33.03 (p <0.0001); DASS21 depression scores reduced from 11.17 to 7.36, anxiety scores reduced from 9.4 to 6.03, and stress scores from 12.29 to 9.46 (p<0.0001 for all). Hospital admission numbers did not change post intervention. Controlling for diabetes type, duration and gender did not have a significant impact on any outcome variable. Conclusion This study provides evidence that treatment by a clinical psychologist can improve both physical and psychological health outcomes for people with diabetes distress and should be considered standard of care for people experiencing diabetes distress with high HbA1c, diabetes related hospitalisation or conflict with family or healthcare professionals around diabetes management. Presentation: Sunday, June 12, 2022 12:30 p.m. - 2:30 p.m.