A team from Leeds University believes the problem could be linked to the fact that youngsters in isolated rural areas are likely to be exposed to fewer infections than those who live in a more built-up environment.
Recent research has shown that improved standards of hygiene, and lower exposure to infection in early infancy may increase the risk of developing conditions such as asthma and eczema.
The Leeds team believe the same could be true for insulin-dependent diabetes.
Researcher Dr Patricia McKinney said: "Although diabetes is less common than asthma, the burden on children and their families is very high.
"Therefore, it's important to identify causes so it can be prevented.
"The number of children with insulin-dependent diabetes is increasing in developed countries throughout the world and the reason for this is unknown."
Immne system equipped
If children are not exposed to infections in early life, their immune system - the body's natural defence mechanism against disease - may not be fully equipped to fight future infections.
In diabetes, it is thought that a viral infection might be responsible for the destruction of the insulin-producing cells within the pancreas.
Experts in the Paediatric Epidemiology Group, at the University of Leeds, will be teaming up with The Diabetes Centre, General Infirmary at Leeds, to analyse data from more than 4,000 young diabetics aged 0-14 years from Yorkshire, Oxfordshire, Leicestershire, and Scotland.
A spokesman for Diabetes UK said: The incidence of Type 1 diabetes has been increasing among children in the UK, and indeed the rest of the world.
"Whilst the 'hygiene hypothesis' is not believed to be a direct cause of Type 1 diabetes its immunological process may show similarities, and as such Diabetes UK will be interested to know the results of related research studies."
The research is being funded by the charity Action Research.
Diabetes is thought to affect one in 60 people in the UK.
It is listed as the second most common chronic childhood illness, where it is a major cause of blindness and kidney failure.