Procedures for the initial management of children newly diagnosed with diabetes vary greatly worldwide and the evidence available is insufficient for conclusively determining the best process regarding hospital-based or home-based care. The aim of the study was to compare two different regimens for children with newly diagnosed type 1 diabetes; hospital-based care and hospital-based home care (HBHC), defined as specialist care in a home-based setting. A randomised controlled trial, including 60 children, took place at a university hospital in Sweden during the period of March 2008 to September 2011. After 2–3 d with hospital-based care, children from 3 to 15 yr of age were randomised to either continued hospital-based care for a total of 1–2 wk or to HBHC. This article presents results 1 month after diagnosis. No differences were shown in the daily mean glucose level or in its variability when the children received care but, after discharge, children who received HBHC showed lower mean plasma glucose values and lower variability compared to children who received hospital-based care. Children in HBHC had fewer episodes of hypoglycaemia during the first month after diagnosis. In the HBHC group, parents were more satisfied with the healthcare received and healthcare costs for the first month were 30% lower as compared to hospital-based care. The results 1 month after diagnosis support the HBHC programme as being a safe and cost-effective way of providing care. A follow-up will continue for 2 yr to evaluate which process was best for the majority of families over time.