Millions of individuals are currently incarcerated in the United States. However, little is known about the effects of incarceration on personality development, particularly during the critical life stage of adolescence. In a large longitudinal sample, adolescents and young adults (N = 7,736) regularly completed personality measures and assessments of court-ordered punishments for criminal behaviors over more than ten years. Using propensity score weighting and multilevel growth curve modeling, we found that personality prospectively predicted the likelihood of incarceration and court-ordered community service, and that personality changed in response to these experiences, compared to a matched control group. Specifically, individuals who were incarcerated were higher in impulsivity, sensation seeking, and depressive symptoms than individuals who were not incarcerated—results for community service youth mostly mirrored these findings. Furthermore, although on average individuals decreased in impulsivity over time, incarcerated individuals increased. In contrast, youth assigned community service experienced normative decreases in impulsivity. Incarcerated individuals also decreased in depressive symptoms over adolescence, while other individuals showed no change in depressive symptoms. This work highlights the lasting negative impact of incarceration in youth, with no evidence of correction via correctional facilities. Preregistration, data, and code [https://osf.io/45qxh/?view_only=0d9ced99898645fe8ee399e8db3c21dc]