Aims/hypothesis Type 1 diabetes is associated with premature arterial disease. Bone-marrow derived, circulating endothelial progenitor cells (EPCs) are believed to contribute to endothelial repair. The hypothesis tested was that circulating EPCs are reduced in young people with type 1 diabetes without vascular injury and that this is associated with impaired endothelial function and increased carotid intima-media thickness (CIMT). Methods We compared 74 people with type 1 diabetes with 80 healthy controls. CD34, CD133, vascular endothelial (VE) growth factor receptor-2 (VEGFR-2) and VE-cadherin antibodies were used to quantify EPCs and progenitor cell subtypes using flow-cytometry. Ultrasound assessment of endothelial function by brachial artery flow-mediated dilatation (FMD) and CIMT was made. Circulating endothelial markers, inflammatory markers and plasma plasminogen activator inhibitor-1 (PAI-1) levels were measured. Results CD34+VE-cadherin+, CD133+VE-cadherin+ and CD133+VEGFR-2+ EPC counts were significantly lower in people with diabetes (46-69%; p=0.004-0.043). In people with type 1 diabetes, FMD was reduced by 45% (p<0.001) and CIMT increased by 25% (p<0.001), these being correlated (r=−0.25, p=0.033). There was a significant relationship between FMD and CD34+VE-cadherin+ (r = 0.39, p = 0.001), CD133+VEGFR-2+ (r =0.25, p = 0.037) and CD34+ (r=0.34, p=0.003) counts. Circulating high-sensitivity C-reactive protein, PAI-1, interleukin-6 and E-selectin were significantly higher in the diabetes group (p < 0.001 to p = 0.049), the last two of these correlating with FMD (r=−0.27, p=0.028 and r=−0.24, p=0.048, respectively). Conclusions/interpretation These findings suggest that abnormalities of endothelial function in addition to proinflammatory and pro-thrombotic states are already common in people with type 1 diabetes before development of clinically evident arterial damage. Low EPC counts confirm risk of macrovascular complications and may account for impaired endothelial function and predict future cardiovascular events.