Young will replace Douglas Smallwood, who has been chief executive since September 2004 and has "left to pursue other interests", a spokeswoman for the charity said.
Before her role at the Care Quality Commission, Young was chief executive of the Environment Agency from 2000 to 2008 and chief executive of the RSPB from 1991 to 1998.
Young said: "There is no doubt that diabetes is one of the most important health issues facing the UK today and is a growing challenge for the future.
"I'm looking forward to taking on that challenge and helping to make a real difference to the lives of people with diabetes."
Professor Sir George Alberti, chairman of the charity’s board of trustees, said: "We are delighted to welcome Barbara to Diabetes UK and we are certain that she will lead the organisation to deliver our plans and objectives in improving the lives of people with diabetes."