Type 1 diabetes mellitus is a chronic disease that may have an impact on children's psychosocial adjustment. This study aimed to investigate the psychosocial characteristics of Kuwaiti children with type 1 diabetes as compared to healthy children without diabetes, and assess the impact of glycaemic control on psychosocial variables. A total of 349 school children aged 6–18 years with type 1 diabetes, and 409 children without diabetes having comparable age, gender, and social class were included in the study. Data were obtained by interviewing children and parents using a questionnaire. Psychological distress was measured by the Hopkins symptoms checklist-25 scale including anxiety and depression. Glycaemic control was assessed by glycosylated haemoglobin, HbA IC level. Glycaemic control was considered ‘good to excellent’ at HbA IC<8.0%, ‘fair’ at HbA IC 8.1 to 10.0%, and ‘poor’ at HbA IC>10.0%. Median scores of anxiety, depression, and total distress were significantly higher in children with diabetes indicating worse psychological adjustment. There was also significant difference between children with diabetes and those without diabetes in social aspects and school absence days. There was significant positive correlation between HbA IC concentration and scores of the psychological functioning indices. Children with poor glycaemic control had worse psychological adjustment. After controlling the variance accounted by gender and age, stepwise multiple regression analysis showed that girls, older children, children in need of emotional support, and those with higher HbA IC were at higher risk for psychological maladjustment. These variables explained 47.9% of the variation in total distress. In conclusion, the study supported our hypotheses. Children with diabetes had worse psychological adjustment, and distress was related to glycaemic control. Since psychological distress increases the risk for future complications due to its relation with glycaemic control, longitudinal studies are recommended to identify children with diabetes having distress at an early stage when preventive interventions are effective.