Individuals with type 1 diabetes have mild performance deficits on a range of neuropsychological tests compared with nondiabetic control subjects. The mechanisms underlying this cognitive deterioration are still poorly understood, but chronic hyperglycemia is now emerging as a potential determinant, possibly through microvascular changes in the brain. In 24 type 1 diabetic patients, we tested at euglycemia and at acute hypoglycemia whether the presence of proliferative diabetic retinopathy, as a marker of microvascular disease, adversely affects the ability of the brain to respond to standardized hypoglycemia, using functional magnetic resonance imaging with a cognitive task. Patients with retinopathy, compared with patients without, showed less deactivation (hence, an increased response) in the anterior cingulate and the orbital frontal gyrus during hypoglycemia compared with euglycemia (P < 0.05). Task performance and reaction time were not significantly different for either group. We conclude that microvascular damage in the brain of patients with retinopathy caused this increased brain response to compensate for functional loss.