1. A prospective randomized study of two dietary regimens has been started in newly-diagnosed diabetics to determine their effect on circulating metabolites and on diabetic complications. 2. During the first year of treatment the fasting plasma glucose concentrations on both the low-carbohydrate diet and the high-carbohydrate, modified-fat (MF) diet showed a similar decrease. 3. Plasma cholesterol showed a sustained decrease only in patients recommended a MF diet. Transient changes in plasma triglyceride concentrations occurred in patients on both dietary regimens. 4. Increased plasma cholesterol levels are associated with atheromatous disease which is common in diabetics in Europe and North America. A MF diet may therefore have an advantage in that it lowers the plasma cholesterol as well as being effective in lowering the plasma glucose.