Aims/hypothesis. To determine whether the clinical heterogeneity observed in the development of Type I (insulin-dependent) diabetes mellitus correlates with immunohistochemical differences observed at diagnosis. Methods. Patients (n = 17) with recent-onset diabetes clinically considered to be insulin dependent (Type I), underwent pancreatic biopsy for immunohistological analysis. These patients were divided into two groups based on the presence or absence of islet immunological abnormalities (insulitis or hyperexpression of MHC class I antigens or both). The patients were also HLA typed and tested for islet cell antibodies and antibodies to glutamic acid decarboxylase (GAD-Ab). All patients were followed monthly for 2 years and their fasting plasma glucose, haemoglobin A_1C and daily insulin doses were recorded. The clinical course of patients with islet immunological abnormalities was compared with that of patients without those abnormalities. Results. Patients with and without islet immunological abnormalities did not differ with regard to HLA type or islet cell antibodies. Antibodies to glutamic acid decarboxylase correlated with the presence of insulitis and MHC class I hyperexpression. These local immunological abnormalities were also associated with higher haemoglobin A_1C values (p < 0.05) and a trend towards greater insulin requirements. Further, patients with the islet abnormalities had higher fasting plasma glucose concentrations 2 years after the biopsy than at the time of the biopsy (p < 0.05). Conclusion/interpretation. The heterogeneous clinical course observed following diagnosis in patients with Type I diabetes correlates with islet immunological abnormalities. Insulitis and hyperexpression of MHC class I correlate with deteriorating glycaemic control. [Diabetologia (1999) 42: 574–578]