AIMS/HYPOTHESIS: We hypothesised that adolescents with type 1 diabetes with a urinary albumin/creatinine ratio (ACR) in the upper tertile of the normal range (high ACR) are at greater risk of three-step diabetic retinopathy progression (3DR) independent of glycaemic control. METHODS: This was a prospective observational study in 710 normoalbuminuric adolescents with type 1 diabetes from the non-intervention cohorts of the Adolescent Cardio-Renal Intervention Trial (AdDIT). Participants were classified as 'high ACR' or 'low ACR' (lowest and middle ACR tertiles) using baseline standardised log10 ACR. The primary outcome, 3DR, was determined from centrally graded, standardised two-field retinal photographs. 3DR risk was determined using multivariable Cox regression for the effect of high ACR, with HbA1c, BP, LDL-cholesterol and BMI as covariates; diabetes duration was the time-dependent variable. RESULTS: At baseline mean ± SD age was 14.3 ± 1.6 years and mean ± SD diabetes duration was 7.2 ± 3.3 years. After a median of 3.2 years, 83/710 (12%) had developed 3DR. In multivariable analysis, high ACR (HR 2.1 [1.3, 3.3], p=0.001), higher mean IFCC HbA1c (HR 1.03 [1.01, 1.04], p=0.001) and higher baseline diastolic BP SD score (HR 1.43 [1.08, 1.89], p=0.01) were independently associated with 3DR risk. CONCLUSIONS/INTERPRETATION: High ACR is associated with greater risk of 3DR in adolescents, providing a target for future intervention studies. TRIAL REGISTRATION: isrctn.org ISRCTN91419926.