Previous studies have shown that recurrent severe hypoglycaemia can cause long-term cognitive impairment in children with type-1 diabetes, but the results are controversial, possibly due to the heterogeneity of samples and lack of comprehensive neuropsychological assessments of children. The aim of this study was to assess the effects of diabetes and severe hypoglycaemia on the neurocognitive functioning of children with a standardized, wide age-range neuropsychological test battery designed for the assessment of children. Eleven children with diabetes and a history of severe hypoglycaemia, 10 children with diabetes without a history of severe hypoglycaemia, and 10 healthy control children (a total of 31 children: 14 males and 17 females, age range 5 years 6 months to 11 years 11 months, mean 9 years 4 months, SD 1 year 11 months) were studied using the Wechsler Intelligence Scale for Children–Revised (WISC-R) and the NEPSY, a Developmental Neuropsychological Assessment. The NEPSY assessed development in attention and executive functions, language, sensorimotor functions, visuospatial processing, and learning and memory. Children with a history of severe hypoglycaemia had more neuropsychological impairments, more learning difficulties (as reported by parents), and needed more part-time special education than those in the other groups. Significant differences were found in verbal short-term memory and phonological processing. Results suggest that severe hypoglycaemia is a risk factor for learning due to deficits in auditory–verbal functioning.