Aims/hypothesis: We aimed to identify circulating microRNA (miRNA) that predicts clinical progression in a cohort of 123 children with new-onset type 1 diabetes mellitus. Methods: Plasma samples were prospectively obtained at 1, 3, 6, 12 and 60 months after diagnosis from a subset of 40 children from the Danish Remission Phase Cohort, and profiled for miRNAs. At the same time points, meal-stimulated C-peptide and HbA_1c levels were measured and insulin-dose adjusted HbA_1c (IDAA_1c) calculated. miRNAs that at 3 months after diagnosis predicted residual beta cell function and glycaemic control in this subgroup were further validated in the remaining cohort (n = 83). Statistical analysis of miRNA prediction for disease progression was performed by multiple linear regression analysis adjusted for age and sex. Results: In the discovery analysis, six miRNAs (hsa-miR-24-3p, hsa-miR-146a-5p, hsa-miR-194-5p, hsa-miR-197-3p, hsa-miR-301a-3p and hsa-miR-375) at 3 months correlated with residual beta cell function 6–12 months after diagnosis. Stimulated C-peptide at 12 months was predicted by hsa-miR-197-3p at 3 months (p = 0.034). A doubling of this miRNA level corresponded to a sixfold higher stimulated C-peptide level. In addition, a doubling of hsa-miR-24-3p and hsa-miR-146a-5p levels at 3 months corresponded to a 4.2% (p < 0.014) and 3.5% (p < 0.022) lower IDAA_1c value at 12 months. Analysis of the remaining cohort confirmed the initial finding for hsa-miR-197-3p (p = 0.018). The target genes for the six miRNAs revealed significant enrichment for pathways related to gonadotropin-releasing hormone receptor and angiogenesis pathways. Conclusions/interpretation: The miRNA hsa-miR-197-3p at 3 months was the strongest predictor of residual beta cell function 1 year after diagnosis in children with type 1 diabetes mellitus.