Type 1 diabetes (T1D) has been linked to alterations in both brain structure and function. However, the neural basis of the most commonly reported neuropsychological deficit in T1D, psychomotor speed, remains severely understudied. To begin to address this, the current study focuses on the neural dynamics underlying motor control using magnetoencephalographic (MEG) imaging. Briefly, 40 young adults with T1D who were clear of common comorbidities (e.g., vascular disease, retinopathy, etc.) and a demographically-matched group of 40 controls without T1D completed an arrow-based flanker movement task during MEG. The resulting signals were examined in the time-frequency domain and imaged using a beamforming approach, and then voxel time series were extracted from peak responses to evaluate the dynamics. The resulting time series were statistically examined for group and conditional effects using a rigorous permutation testing approach. Our primary hypothesis was that participants with T1D would have altered beta and gamma oscillatory dynamics within the primary motor cortex during movement, and that these alterations would reflect compensatory processing to maintain adequate performance. Our results indicated that the group with T1D had a significantly stronger post-movement beta rebound (PMBR) contralateral to movement compared to controls, and a smaller neural flanker effect (i.e., difference in neural activity between conditions). In addition, a significant group-by-condition interaction was observed in the ipsilateral beta event-related desynchronization (bERD) and the ipsilateral PMBR. We also examined the relationship between oscillatory motor response amplitude and reaction time, finding a differential effect of the driving oscillatory responses on behavioral performance by group. Overall, our findings suggest compensatory activity in the motor cortices is detectable early in the disease in a relatively healthy sample of adults with T1D. Future studies are needed to examine how these subtle effects on neural activity in young, otherwise healthy patients affect outcomes in aging.