Diabetes mellitus (DM) is a metabolic disease characterized by absolute or relative insulin deficiency. Absolute deficiency of insulin most commonly results from an autoimmune destruction of insulin producing cells in the pancreas and in general, the term Type 1 DM (T1DM) is used to denote childhood diabetes associated with autoimmunity and absolute insulin deficiency. The term Type 2 DM (T2DM) is used to denote diabetes resulting from a relative deficiency of insulin when insulin secretion is inadequate to overcome co-existent resistance to insulin action on carbohydrate, protein or fat metabolism; T2DM is most commonly associated with the prototypic insulin resistant state of obesity. In the western hemisphere DM is one of the most prevalent chronic diseases in childhood, whereas the incidence of T1DM in developing countries is significantly less than that in the western hemisphere. Epidemiological studies indicate that there is gradual but steady increase in the incidence of both T1DM and T2DM in both developed and developing countries. This review provides an overview of the major advances in our understanding of the aetiology, pathogenesis, and clinical management of DM in children with the focus being on T1DM. Genetic predisposition, environmental causes, and emerging concepts of the pathogenesis of T1DM such as the accelerator hypothesis are discussed. The goals of treating a child with DM are to achieve normal growth and development with prevention of acute and chronic complications of DM. These goals are achieved by co-ordinated care delivered by a multidisciplinary team focusing on insulin administrations, glucose monitoring, meal planning, and screening for complications. Newer insulin analogues ("designer" insulin) and automated methods of delivery via programmable pumps have revolutionized the care of the child with diabetes. Though T1DM cannot yet be prevented, ongoing trials and strategies aimed at modulating the autoimmune response and the burgeoning science of embryonic stem cell biology, and isolating and propagating islet cell progenitor cells are discussed in this review.