Background Initial management of children diagnosed with type 1 diabetes (T1D) varies worldwide with sparse high quality evidence regarding the impact of different models of care. Aim To compare the inpatient model of care with a hybrid home-based alternative, examining metabolic and psychosocial outcomes, diabetes knowledge, length of stay, and patient satisfaction. Subjects and Methods The study design was a randomized-controlled trial. Inclusion criteria were: newly diagnosed T1D, aged 3 to 16 years, living within approximately 1 hour of the hospital, English-speaking, access to transport, absence of significant medical or psychosocial comorbidity. Patients were randomized to standard care with a 5 to 6 day initial inpatient stay or discharge after 2 days for home-based management. All patients received practical skills training in the first 48 hours. The intervention group was visited twice/day by a nurse for 2 days to assist with injections, then a multi-disciplinary team made 3 home visits over 2 weeks to complete education. Patients were followed up for 12 months. Clinical outcomes included HbA1c, hypoglycemia, and diabetes-related readmissions. Surveys measured patient satisfaction, diabetes knowledge, family impact, and quality of life. Results Fifty patients were recruited, 25 to each group. There were no differences in medical or psychosocial outcomes or diabetes knowledge. Average length of admission was 1.9 days shorter for the intervention group. Families indicated that with hindsight, most would choose home- over hospital-based management. Conclusions With adequate support, children newly diagnosed with T1D can be safely managed at home following practical skills training.