OBJECTIVE - To examine the loss of glucagon response to hypoglycemia and its relationship with residual β-cell function early in the course of type 1 diabetes (T1D) in youth. RESEARCH DESIGN AND METHODS - Twenty-one youth with T1D duration <1 year (ages 8-18 years, T1D duration 6-52 weeks) underwent mixed-meal tolerance tests (MMTTs) to assess residual β-cell function and hypoglycemic clamps to assess glucagon responses to hypoglycemia. Glucagon responses to hypoglycemia in T1D subjects were compared with those in 12 nondiabetic young adults (ages 19-25 years). RESULTS - Peak MMTT-stimulated C-peptide levels (range 0.12-1.43) were ≥0.2 nmol/L in all but one T1D subject. As expected, the median of glucagon responses to hypoglycemia in the T1D subjects (18 pg/mL [interquartile range 7-32]) was significantly reduced compared with the responses in nondiabetic control subjects (38 pg/mL [19-66], P = 0.02). However, there was no correlation between the incremental increase in plasma glucagon during the hypoglycemic clamp and the incremental increase and peak plasma C-peptide level during the MMTT. Similarly, the seven T1D subjects who failed to achieve an increase in glucagon ≥12 pg/mL (i.e., 3 SD above baseline values) had C-peptide response ≥0.2 nmol/L (0.54- 1.12), and the one T1D subject with peak stimulated <0.2 nmol/L had a 14 pg/mL increase in plasma glucagon in response to hypoglycemia. CONCLUSIONS - Impaired plasma glucagon responses to hypoglycemia are evident in youth with T1D during the first year of the disease. Moreover, defective and absent glucagon responses to hypoglycemia were observed in patients who retained clinically important residual endogenous β-cell function.