OBJECTIVE We tested the hypothesis that impaired awareness of hypoglycemia (IAH) is independently associated with symptoms of anxiety and depression in type 1 diabetes. RESEARCH DESIGN AND METHODS In this cross-sectional observational study in 950 adults with type 1 diabetes, associations were examined using multiple regression models, adjusting for sociodemographic and clinical characteristics. RESULTS Prevalence for probable anxiety, depression, and IAH were 9.4%, 9.8%, and 22.6%, respectively. When included in separate regression models, both depression and anxiety were independently associated with an increased odds of IAH and robust to adjustment (odds ratio 3.64 [95% CI 2.19–6.04] and 2.46 [1.46–4.14], respectively). Further analysis demonstrated a dose-response relationship between increased severity of probable mental disorder and increased odds of having IAH (P < 0.001). CONCLUSIONS The robust independent relationship between probable anxiety and depression with IAH demonstrates the need for routine psychological assessment and management of people with type 1 diabetes and IAH.