Anemia is a common finding in diabetes, although most patients in these studies have type 2 disease. This study examines the prevalence and predictors of anemia in outpatients with type 1 diabetes. A full blood count was obtained in addition to routine testing in patients with type 1 diabetes at the Austin Medical Centre (n = 135), Melbourne, the Royal Prince Alfred Hospital (n = 42), and the Royal North Shore Hospital (n = 135), both in Sydney, Australia. One in seven patients had anemia (14%). Patients at greatest risk could be identified by the presence of diabetic kidney disease. More than half (52%) of patients with macroalbuminuria had anemia, compared with 24% of patients with microalbuminuria and less than 8% of normoalbuminuric patients. Patients with diabetes and renal impairment were more than six times more likely to have anemia than those with normal renal function. Patients with anemia were more likely to have retinopathy and macrovascular complications than were patients with a normal hemoglobin level, independent of comorbid renal disease. Anemia is a prevalent finding in patients with type 1 diabetes and represents a significant unrecognized burden. Patients at greatest risk can be identified by the presence of renal disease, in the form of albuminuria and/or renal impairment.