The association of depression and diabetes mellitus is supported by numerous studies, although the nature of this relationship is complex. In order to better understand this complex relationship, the present study sought to examine interrelations between depression, diabetes health outcomes, quality of life, treatment compliance, and psychological factors such as hopelessness, self-efficacy and self-perceptions in 50 outpatients with Type 1 diabetes (30 women, 20 men, median age 34 years). Participants with and without depression exhibited differences in expected directions on treatment adherence, quality of life, and psychological factors. Diabetic complications, overall adherence, and physical self-concept were significant predictors of depression, while depression was a significant predictor of overall adherence to diabetic treatment, and physical self-concept. Depression also exhibited a predictive trend with respect to diabetic complications. Finally, only physical self-concept was a significant predictor of quality of life. Advancing our understanding of the nature of the relationship between depression and health outcomes will be important in developing early interventions.