Preventive approaches have latterly gained traction for improving mental health in young people. In this paper, we first appraise the conceptual foundations of preventive psychiatry, encompassing the public health, Gordon's, US Institute of Medicine, World Health Organization, and good mental health frameworks, and neurodevelopmentally‐sensitive clinical staging models. We then review the evidence supporting primary prevention of psychotic, bipolar and common mental disorders and promotion of good mental health as potential transformative strategies to reduce the incidence of these disorders in young people. Within indicated approaches, the clinical high‐risk for psychosis paradigm has received the most empirical validation, while clinical high‐risk states for bipolar and common mental disorders are increasingly becoming a focus of attention. Selective approaches have mostly targeted familial vulnerability and non‐genetic risk exposures. Selective screening and psychological/psychoeducational interventions in vulnerable subgroups may improve anxiety/depressive symptoms, but their efficacy in reducing the incidence of psychotic/bipolar/common mental disorders is unproven. Selective physical exercise may reduce the incidence of anxiety disorders. Universal psychological/psychoeducational interventions may improve anxiety symptoms but not prevent depressive/anxiety disorders, while universal physical exercise may reduce the incidence of anxiety disorders. Universal public health approaches targeting school climate or social determinants (demographic, economic, neighbourhood, environmental, social/cultural) of mental disorders hold the greatest potential for reducing the risk profile of the population as a whole. The approach to promotion of good mental health is currently fragmented. We leverage the knowledge gained from the review to develop a blueprint for future research and practice of preventive psychiatry in young people: integrating universal and targeted frameworks; advancing multivariable, transdiagnostic, multi‐endpoint epidemiological knowledge; synergically preventing common and infrequent mental disorders; preventing physical and mental health burden together; implementing stratified/personalized prognosis; establishing evidence‐based preventive interventions; developing an ethical framework, improving prevention through education/training; consolidating the cost‐effectiveness of preventive psychiatry; and decreasing inequalities. These goals can only be achieved through an urgent individual, societal, and global level response, which promotes a vigorous collaboration across scientific, health care, societal and governmental sectors for implementing preventive psychiatry, as much is at stake for young people with or at risk for emerging mental disorders.