Aim: To pilot-test an intervention, co-designed with people with type 1 diabetes (T1DM) and diabetes specialist nurses, to reduce diabetes distress (DD) in adults with T1DM and moderate-to-severe DD. Methods: A group-based programme to reduce DD in people with T1DM and moderate-to-severe DD (REDUCE) was pilot-tested in four groups with five bi-weekly two and a half-hour meetings facilitated by two trained diabetes specialist nurses. Data collection included baseline and post-intervention questionnaires measuring DD and psychosocial outcomes and semi-structured interviews with participants post-intervention (n = 18). Data were analysed using descriptive statistics and systematic text condensation. Results: Twenty-five adults with T1DM participated in the study. The median age and diabetes duration of participants were 50 (IQR: 32;57.5) years and 26 (IQR: 18;45) years, respectively. Seventeen (68%) were women. The pilot study showed a significant reduction in DD (measured by Type 1 Diabetes Distress Scale) between baseline and post-intervention from 2.6 ± 0.7 to 1.9 ± 0.6 (mean ± SD) (p < 0.001). The largest reductions were seen on the subscales: powerlessness 1.2 ± 1.1, eating distress 0.9 ± 1.2 and fear of hypoglycaemia 0.8 ± 1.0 (mean ± SD). Significant improvements were also seen for quality of life, diabetes empowerment and emotion regulation. Qualitative data showed that REDUCE supported participants in verbalizing emotions and seeing worries in a more constructive perspective. Acknowledgement of negative diabetes experiences eased negative self-judgments. Sharing experiences among peers increased relatedness and reduced loneliness. Conclusion: Participation in REDUCE was associated with significant reduction in DD and significant increase in quality of life. Larger scale studies are planned to determine sustained effectiveness of REDUCE.