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Background: The demands of diabetes care can place substantial burden on youth with type 1 diabetes (T1D), who must manage their treatment in conjunction with the developmentally typical tasks of adolescence. How diabetes affects the normative task of identity development deserves further exploration. Methods: A sample of 83 participants (ages 13‐21) completed a qualitative interview about life with diabetes and a battery of validated psychosocial measures. Individual interviews were analyzed using content analysis to create criteria for whether a teen had incorporated their T1D in relation to their identity. Convergent validity was assessed by comparing identity groups on various validated measures of psychosocial characteristics and health‐related outcomes. Analysis of covariances (ANCOVAs) were used to determine whether identity status had a significant relationship to health outcomes. Results: Results indicated that youth who were categorized as incorporating their T1D into their identities demonstrated significantly greater perceived social competency (P =.014), greater diabetes‐specific self‐esteem (P <.001), better self‐care (P =.002), and more life satisfaction (P =.001) than those who had not incorporated T1D. Incorporation was also associated with better glycemic control (P =.003). Identity remained significantly associated with the above psychosocial and health‐related outcomes even when controlling for covariates of gender and method of insulin delivery (Ps <.01). Conclusions: Successful incorporation of diabetes is associated with better biomedical and psychosocial outcomes in teens with T1D. Further research is warranted to assess influences on identity as well as how to encourage and support incorporation in this at‐risk population. [ABSTRACT FROM AUTHOR]