Objectives:  The objectives of the study were to (i) determine the incidence of type 1 diabetes mellitus (T1DM) in children aged <15 yr in Victoria, Australia, from 1999 to 2002 and (ii) to analyze trends in incidence over this period.

Methods:  Prospective population‐based incidence study. The primary source of case ascertainment was from the Australasian Paediatric Endocrine Group (APEG) Victorian diabetes register. The secondary source was the National Diabetes Register (NDR), which ascertains cases from the National Diabetes Service Scheme (NDSS), a Commonwealth government initiative, where patients register to receive diabetes supplies at a subsidized price.

Main outcome measures:  Age‐standardized incidence, trends in incidence by age, sex and year, and variation in incidence by region, season, and socioeconomic status.

Results:  Case ascertainment was 99.1% complete using the capture–recapture method. The mean annual age‐standardized incidence was 19.3 per 100 000 person years from 1999 to 2002. On average, incidence increased by 9.3% per year, with a greater relative increase in the 0–4 yr age‐group (p = 0.037). No gender bias in incidence was found, but the increase in females was statistically significant (13.6% per year, 95% confidence interval 3.7–24.3). Variation in geographical distribution and seasonal onset of incidence was not statistically significant.

Conclusions:  The marked increase in the incidence of T1DM in Victoria is greater than that recently described in other Australia states and developed nations. The etiology of this rise is unclear, while the increased caseload has major implications for diabetes health care providers for current and future resource allocation.