OBJECTIVE: To evaluate the psychological adjustment of young adults with IDDM in comparison with similarly aged individuals without chronic illness. RESEARCH DESIGN AND METHODS: An onset cohort of young adults (n = 57), ages 19–26 years, who have been followed over a 10-year period since diagnosis, was compared with a similarly aged group of young adults identified at the time of a moderately severe, acute illness (n = 54) and followed over the same 10-year period. The groups were assessed at 10-year follow-up in terms of 1) sociodemographic indices (e.g., schooling, employment, delinquent activities, drug use), 2) psychiatric symptoms, and 3) perceived competence. In addition, IDDM patients were examined for longitudinal change in adjustment to diabetes. RESULTS: The groups differed only minimally in terms of sociodemographic indices, with similar rates of high school graduation, post-high school education, employment, and drug use. The IDDM group reported fewer criminal convictions and fewer non-diabetes-related illness episodes than the comparison group. There were no differences in psychiatric symptoms. However, IDDM patients reported lower perceived competence, with specific differences found on the global self-worth, sociability, physical appearance, being an adequate provider, and humor subscales. The IDDM patients reported improving adjustment to their diabetes over the course of the 10-year follow-up. CONCLUSIONS: Overall, the young adults with IDDM appeared to be as psychologically well adjusted as the young adults without a chronic illness. There were, however, indications of lower self-esteem in the IDDM patients that could either portend or predispose them to risk for future depression or other difficulties in adaptation.