Aims/hypothesis. Type 1 diabetic patients who develop microalbuminuria are clearly disadvantaged in terms of their risk of morbidity and mortality from renal and cardiovascular diseases. It is therefore important to identify potential factors that can predict progression to macroalbuminuria. Methods. This is a 7-year follow-up study of 352 microalbuminuric Type 1 diabetic patients from 31 European centres. Risk factors at baseline were compared in patients who progressed to macroalbuminuria and in patients who remained microalbuminuric or reverted to normoalbuminuria. Risk factors and albumin excretion rate (AER) were measured centrally. Results. Over 7.3 years, 13.9% of the microalbuminuric patients progressed to macroalbuminuria, 35.5% remained microalbuminuric and 50.6% reverted to normoalbuminuria. Independent baseline risk factors for progression to macroalbuminuria were HbA 1 c (7.9% vs 6.8%, p=0.004), AER (64.4 vs 44.9 µg/min, p=0.0001) and-after adjusting for diabetes duration, HbA 1 c and AER-body weight (72 vs 67 kg, p=0.05). Independent factors associated with regression to normoalbuminuria were diabetes duration (15 vs 18 years, p=0.004), AER (37.2 vs 44.9 µg/min, p=0.0001) andafter adjusting for diabetes duration, HbA 1 c and AER-waist-to-hip ratio (0.83 vs 0.86, p=0.05) and incidence of peripheral neuropathy at baseline (24% vs 38%, p=0.001). Blood pressure and smoking did not emerge as risk factors at baseline for the outcome of microalbuminuria. Conclusions/interpretation. A significant fraction of microalbuminuric Type 1 diabetic patients will progress to overt proteinuria. Patients with higher AER values, sub-optimal metabolic control, excess body fat and peripheral neuropathy may carry a particularly high risk of clinical nephropathy requiring aggressive therapeutic intervention.