Diabetic cardiomyopathy is an important contributor to diastolic and systolic heart failure. We examined the nature and mechanism of the cardiomyopathy in Akita (Ins2(WT/C96Y)) mice, a model of genetic nonobese type 1 diabetes that recapitulates human type 1 diabetes. Cardiac function was evaluated in male Ins2WT/C96Y and their littermate control (Ins2WT/WT) mice using echocardiography and tissue Doppler imaging, in vivo hemodynamic measurements, as well as ex vivo working heart preparation. At 3 and 6 mo of age, Ins2WT/C96Y mice exhibited preserved cardiac systolic function compared with Ins2WT/WT mice, as evaluated by ejection fraction, fractional shortening, left ventricular (LV) end-systolic pressure and maximum rate of increase in LV pressure in vivo, cardiac work, cardiac power, and rate-pressure product ex vivo. Despite the unaltered systolic function, Ins2WT/C96Y mice exhibited significant and progressive diastolic dysfunction at 3 and 6 mo of age compared with Ins2WT/WT mice as assessed by tissue and pulse Doppler imaging (E-wave velocity, isovolumetric relaxation time) and by in vivo hemodynamic measurements (LV end-diastolic pressure, time constant of LV relaxation, and maximum rate of decrease in LV pressure). We found no evidence of myocardial hypertrophy or fibrosis in the Ins2WT/C96Y myocardium. Consistent with the lack of fibrosis, expression of procollagen-alpha type I, procollagen-alpha type III, and fibronectin were not increased in these hearts. Ins2WT/C96Y hearts showed significantly reduced sarcoplasmic reticulum Ca2+-ATPase 2a (cardiac sarcoplasmic reticulum Ca2+ pump) levels, elevated beta-myosin heavy chain isoform, increased long-chain fatty acids, and triacylglycerol with evidence of lipotoxicity, as indicated by a significant rise in ceramide, diacylglycerol, and lipid deposits in the myocardium. Consistent with metabolic perturbation, and a switch to fatty acid oxidation from glucose oxidation in Ins2WT/C96Y hearts, expression of mitochondrial long-chain acyl-CoA dehydrogenase and pyruvate dehydrogenase kinase isoform 4 were increased. Insulin treatment reversed the diastolic dysfunction, the elevated B-type natriuretic peptide and beta-myosin heavy chain, and the reduced sarcoplasmic reticulum Ca2+-ATPase 2a levels with abolition of cardiac lipotoxicity. We conclude that early type 1 diabetic cardiomyopathy is characterized by diastolic dysfunction associated with lipotoxic cardiomyopathy with preserved systolic function in the absence of interstitial fibrosis and hypertrophy.