Background Ill health is a risk factor and a consequence of unemployment, which might vary depending on the national rate of unemployment. We investigated the long-term effect of youth unemployment on mental health and explored the possible interaction during periods of high (economic crisis) and low (non-crisis) unemployment rates. Methods A register-linked population-based cohort study was conducted including individuals aged 1724 years. The crisis cohort (n= 6410) took part in the Labour Force Survey during the economic crisis (1991-1994) in Sweden and the non-crisis cohort (n= 8162) took part in the same survey before the crisis (1983-1986). Follow-up was 19 years. Adjusted HRs and 95% CIs for an inpatient care discharge mental diagnosis with employed people as the reference group were calculated by Cox regressions models. Results In fully adjusted models, <3 months (HR: 1.69; 95% CI 1.14 to 2.49), 3-6 months (2.19; 1.43 to 3.37) and > 6 months (2.70; 1.71 to 4.28) of unemployment were associated with increased risks of getting a mental diagnosis in the crisis cohort. In the non-crisis cohort the risks were: 1.92; 1.40 to 2.63, 2.60; 1.72 to 3.94 and 3.33; 2.00 to 5.57, respectively. No interactions between labour force status and level of unemployment were found. Conclusions Youth unemployment is related to mental health problems, independent of the overall national rate of unemployment, which is important as the youth unemployment rates are currently at stable high level.