Lipodystrophy is the most common dermatological complication in patients with diabetes on insulin therapy. Despite the high frequency of lipodystrophy, there are still several difficulties in giving advice about avoidance into practice among children and adolescents with type 1 diabetes and their caregivers. This cross-sectional study aims to evaluate the prevalence of insulin-induced lipodystrophy in a cohort of pediatric patients with type 1 diabetes, to identify associated clinical factors and to assess its influence on glycemic control. Two hundred and twelve patients attending our Diabetes Center during a three-month period were enrolled. The presence of lipodystrophy was assessed by inspection and palpation procedures. Demographic and clinical data including type of treatment, frequency of rotation of insulin administration sites, and glucose metrics of the previous 30 days were assessed and statistically analyzed. Prevalence of lipohypertrophy was 44.3%. Two patients were affected by lipoatrophy (0.9%). Improper rotation of insulin administration sites and low awareness on lipodystrophy were associated to the occurrence of this skin condition (p = 0.050 and p = 0.005, respectively). When comparing patients with and without lipodystrophy, a significant difference in glycemic variability parameters was detected (p = 0.036 for coefficient of variation, p = 0.029 for standard deviation score of glucose levels). Lipodystrophy still represents a common complication in patients on insulin therapy. The present study reveals its negative impact on glycemic variability. This finding emphasizes the importance of prevention strategies to minimize the occurrence of this dermatological complication that may interfere with clinical history of the disease.