We assessed the effect of diabetes and of episodes of severe hypoglycaemia on cognitive function in 28 diabetic children. Fifteen diabetic children (age 12.9 (SD 2.0) years) had experienced 1-4 episodes of severe hypoglycaemia. Five of these children diseased before the age of 5 years (SH-eod subgroup), and ten diseased after this age (SH-lod subgroup). Thirteen diabetic children (age 13.1 (SD 2.0) years) had not experienced episodes of severe hypoglycaemia (non-SH group). Each diabetic child was compared with a healthy control child of the same age and gender and with a similar social background. Neuropsychological assessment was blinded. The neuropsychological tests were grouped into one of seven cognitive domains. We found no effect on cognitive performance from diabetes per se or from severe hypoglycaemia in children with late-onset diabetes. However, early-onset diabetes was associated with low scores in two cognitive domains: psychomotor efficiency and attention. The SH-eod subgroup had lower scores than the SH-lod subgroup in psychomotor efficiency (p < 0.05) and also had lower scores than the SH-lod subgroup and the non-SH group in measures of attention (p < 0.05). Our results may indicate a slight cognitive dysfunction in children with early-onset diabetes who have experienced episodes of severe hypoglycaemia early in childhood.