Novel biomarkers of disease progression after type 1 diabetes onset are needed. We profiled peripheral blood (PB) monocyte gene expression in six healthy subjects and 16 children with type 1 diabetes diagnosed ∼3 months previously and analyzed clinical features from diagnosis to 1 year. Monocyte expression profiles clustered into two distinct subgroups, representing mild and severe deviation from healthy control subjects, along the same continuum. Patients with strongly divergent monocyte gene expression had significantly higher insulin dose-adjusted HbA(1c) levels during the first year, compared with patients with mild deviation. The diabetes-associated expression signature identified multiple perturbations in pathways controlling cellular metabolism and survival, including endoplasmic reticulum and oxidative stress (e.g., induction of HIF1A, DDIT3, DDIT4, and GRP78). Quantitative PCR (qPCR) of a 9-gene panel correlated with glycemic control in 12 additional recent-onset patients. The qPCR signature was also detected in PB from healthy first-degree relatives. A PB gene expression signature correlates with glycemic control in the first year after diabetes diagnosis and is present in at-risk subjects. These findings implicate monocyte phenotype as a candidate biomarker for disease progression pre- and postonset and systemic stresses as contributors to innate immune function in type 1 diabetes.