OBJECTIVE—A protective effect of residual β-cell function on microvascular complications of type 1 diabetes has been suggested. Our aim was to retrospectively evaluate the association of fasting plasma C-peptide values with micro- and macrovascular complications. RESEARCH DESIGN AND METHODS—We recruited a clinic-based cohort of 471 type 1 diabetic patients born after 1945 and cared for in the period 1994–2004. Centralized measurements and standardized procedures of ascertainment of micro- and macrovascular complications were employed. Individual cumulative averages of A1C up to 2007 were calculated. RESULTS—Residual β-cell secretion was detected even many years after diabetes diagnosis. In multivariate linear regression analysis, fasting plasma C-peptide values were positively associated with age at diagnosis (β = 0.02; P < 0.0001) and triglycerides (β = 0.20; P = 0.05) and inversely associated with diabetes duration (β = −0.03; P < 0.0001) and HDL cholesterol (β = −0.006; P = 0.03). The final model explained 21% of fasting C-peptide variability. With respect to fasting C-peptide values in the lowest tertile (<0.06 nmol/l), higher values were associated with lower prevalence of microvascular complications (odds ratio [OR] 0.59 [95% CI 0.37–0.94]) independently of age, sex, diabetes duration, individual cumulative A1C average during the study period, hypertension, and cardiovascular diseases. No association was evident with macrovascular complications (0.77 [0.38–1.58]). CONCLUSIONS—Our study shows an independent protective effect of residual β-cell function on the development of microvascular complications in type 1 diabetes, suggesting the potential beneficial effect of treatment that allows the preservation of even modest β-cell function over time.