Insulin antibodies, as measured by plasma radiolabeled insulin-binding capacity, were determined in 124 newly diagnosed insulin-dependent diabetic (IDDM) children before and after 1, 3, and 5 days of insulin therapy. Controls were 35 nondiabetic children with plasma insulin binding capacity of 1.0 +/- 0.7%. The patients were divided into three groups according to their plasma insulin-binding capacity. Group 1 (N = 79) had binding within two standard deviations (SD) of the control mean, group 2 (N = 20) had insulin binding 2-6 SD above controls, and group 3 (N = 25) showed insulin-binding capacity of more than 6 SD above the control mean. After exogenous insulin therapy, plasma 125I-insulin-binding capacity dropped significantly in both groups 2 and 3, concurrent with significant increases in plasma insulin levels. The three groups differed from each other in that patients in group 3 were significantly younger than in the other groups and clinically seemed to be more severely dehydrated, as reflected in their higher levels of serum urea nitrogen, plasma glucose, potassium, and elevated pulse rate. The three groups did not differ in respect to sex, HLA-DR antigens, Coxsackie-B antibody titers, islet cell cytoplasmic antibodies, immunoglobulin level, and C-peptide levels. Only two of 446 siblings of IDDM children showed elevated insulin binding, one of whom developed IDDM 6 wk later. The presence of an insulin-binding substance probably representing insulin antibodies in some cases of newly diagnosed IDDM suggests that autoimmunity in this disorder is not limited to the B-cell membrane and cytoplasm and lends further support to the heterogeneity of IDDM.