Combined pegylated interferon (PEG-IFN)+ribavirin (RBV) therapy has been used as a primary treatment for chronic hepatitis C. However, IFN-induced autoimmune disease, including type 1 diabetes mellitus, has been highlighted as one of the problems with this therapy. Here we report the case of a patient who developed type 1 diabetes mellitus during combined PEG-IFN+RBV therapy for hepatitis C but who showed no exacerbation of diabetes despite continued use of IFN. A 63-year-old man with chronic hepatitis C and a nonresponder to previous IFNα treatments, was admitted to our hospital because of excessive thirst, polydipsia, and polyuria 24 weeks after the start of PEG-IFNα+RBV therapy. High levels of blood glucose and glycosylated hemoglobin and low levels of C-peptide and immunoreactive insulin were observed. The serum antiglutamic acid decarboxylase antibody titer was 27,700 U/mL. We diagnosed IFN-induced type 1 diabetes mellitus; however PEG-IFNα+RBV therapy was continued for 48 weeks. Serum HCV remains negative five years after this treatment. Intensive insulin therapy was started immediately after the diagnosis of type 1 diabetes. Although the patient initially required 22 U/day of insulin, the dosage could be gradually reduced after completion of PEG-IFNα+RBV therapy and blood glucose remained well controlled. Prediction of onset of type 1 diabetes mellitus on the basis of baseline measurement of pancreas-associated autoantibodies is difficult. Therefore, it would be advisable to consider the possibility of onset of type 1 diabetes mellitus in all patients receiving IFN+RBV therapy.