Throughout adolescence, young people are going through a period of rapid biopsychosocial change when the developmental demands (‘tasks’) of childhood (e.g. sustaining friendships and achieving academic success) are continuing, tasks of adolescence (e.g. developing the sense of self and acquiring autonomy) are central and certain tasks of adulthood (e.g. focusing on career, intimate relationships and future health) are emerging. Young people with diabetes are also coping with the demands of their condition, managing the change from paediatric to adult services and may have additional psychological difficulties associated with diabetes. In addition, ongoing life‐events and daily hassles continue during this period. The developmental tasks of adolescence and young adulthood are described. A brief overview of recent research into the impact of diabetes upon adolescent development and the specific psychological difficulties associated with diabetes is provided. It is suggested that young people with diabetes experience a sense of difference and constancy to do with their condition. An increased prevalence of ‘sub‐clinical’ eating problems and likelihood of depression could also be apparent in this population. Young people's suggestions for providing developmentally‐appropriate services are outlined and implications for service delivery are discussed. Copyright © 2005 John Wiley & Sons, Ltd.