Those with type 1 diabetes whose blood glucose is in the target range increased from 17.8% in 2014-15 to 27.2% in 2015-16.
Diabetes affects the body's ability to produce insulin, meaning there can be dangerously high levels of glucose (or sugar) in the blood.
The annual statement of progress for diabetes also said those with high blood glucose fell from 21.6% to 18.6%.
Research for the National Paediatric Diabetes Audit found there were 1,400 children and young people, under the age of 19, with diabetes, in Wales. Almost all (96%) had Type 1 diabetes.
Issues caused by the condition include long-term eye, kidney and vascular problems.
In 2015-16, 188,644 adults (aged 17 or over) were registered with their GP as living with it, an increase of 17.5% on the 160,533 registered in 2010-11.
A further 540,000 are at risk of developing the disease.
Chief executive of NHS Wales, Dr Andrew Goodall said more education was being provided to help all people living with diabetes.
He said: "With careful management, healthy lifestyle choices and good blood glucose control the risks of complications are markedly reduced."
The health of children with diabetes in Wales is improving, a report has shown.