Objective To examine demographic differences in parenting behaviors and adjustment in youth with type 1 diabetes. Methods Adolescents’ psychosocial adjustment was assessed via self-reports and parent reports, and clinical data were obtained from adolescents’ medical records. Mother–adolescent dyads (N = 93) engaged in a videotaped discussion task, which was coded for observed parenting behaviors. Results Single and non-White mothers exhibited significantly more overinvolved and less collaborative parenting behaviors. Higher levels of overinvolved parenting and lower levels of collaborative parenting were associated with poorer adolescent adjustment (i.e., higher levels of externalizing problems). Observed parenting was not significantly associated with glycemic control. There was an indirect effect of marital status and race/ethnicity on externalizing behaviors through parenting. Conclusions The current study highlights parenting as a potential target for interventions, especially in single and minority mothers, to improve adjustment in this population.