The high prevalence rate of mental health difficulties in youth involved in the justice system raises concerns as well as numerous questions for research, policy, and practice. In this article we examine several aspects of the intersection between mental health and Canadian youth justice policy and practice, with a particular focus on describing models of the relationship between mental health problems and justice system involvement and considering the implications of these models for the effective assessment and treatment of justice-involved youth. Our review highlights that research examining this relationship has suffered because of a lack of communication between clinical and correctional researchers, and that the assumption regarding the causal role of mental health issues in offending behaviour needs much more attention. Recommendations following this review include widespread mental health screening for justice-involved youth, greater uptake on the available sections of the Youth Criminal Justice Act that allow for specialized assessments and sentencing for youth with mental health concerns, and a research agenda that focuses on the relationship between mental health concerns and criminal behaviour in both boys and girls.