Evaluation of thyroid hormone indices was performed in 138 children with newly diagnosed type 1 diabetes, with their siblings serving as controls. The DKA group consisted of 76 children who had diabetic ketoacidosis (DKA) at initial diagnosis. The non-DKA group consisted of 62 children and the control group of 35. The thyroid function tests of the patients were measured within 3 days of the initial diagnosis of diabetes and at least one follow-up test one month to two years after adequate treatment of diabetes. The DKA group had significantly lower levels of T3, T4, free T4 and FTI than did the other two groups (p < 0.0001, p < 0.0001, p < 0.0001, and p < 0.0001, respectively). T3 concentration was lower in non-DKA subjects than in controls (p = 0.0003), but the two groups did not significantly differ in terms of T4, free T4, and FTI. The TSH level did not differ among the three groups. We conclude that DKA changes thyroid function measurements. In the absence of true thyroid disease, abnormal thyroid function tests are reversible after institution of good diabetic control. We suggest that thyroid function tests should be restricted to those patients suspected of having thyroid disorders at the initial diagnosis of type 1 diabetes.