Despite several high-quality reviews of insomnia and incidence of mental disorders, prospective longitudinal relationships between a wider range of sleep disturbances and first onset of a depressive, bipolar, or psychotic disorders during the peak age range for onset of these conditions has not been addressed. Database searches were undertaken to identify publications on insomnia, but also on other sleep problems such as hypersomnia, short sleep duration, self-identified and/or generic ‘sleep problems’ and circadian sleep-wake cycle dysrhythmias. We discovered 36 studies that were eligible for systematic review and from these publications, we identified 25 unique datasets that were suitable for meta-analysis (Number>45,000; age ∼17). Individuals with a history of any type of sleep disturbance (however defined) had an increased odds of developing a mood or psychotic disorder in adolescence or early adulthood (Odds ratio [OR]:1.88; 95% Confidence Intervals:1.67, 2.25) with similar odds for onset of bipolar disorders (OR:1.72) or depressive disorders (OR:1.62). The magnitude of associations differed according to type of exposure and was greatest for sleep disturbances that met established diagnostic criteria for a sleep disorder (OR: 2.53). However, studies that examined observer or self-rated symptoms, also reported a significant association between hypersomnia symptoms and the onset of a major mental disorder (OR:1.39). Overall study quality was moderate with evidence of publication bias and meta-regression identified confounders such as year of publication. We conclude that evidence indicates that subjective, observer and objective studies demonstrate a modest but significant increase in the likelihood of first onset of mood and psychotic disorders in adolescence and early adulthood in individuals with broadly defined sleep disturbances. Although findings support proposals for interventions for sleep problems in youth, we suggest a need for greater consensus on screening strategies and for more longitudinal, prospective studies of circadian sleep-wake cycle dysrhythmias in youth.