In recent years, the problem of youth unemployment in China has become a great concern. Unemployed young people often find themselves under tremendous stress and vulnerable to sleep problems. The link between perceived stress and insomnia has been widely documented, but the potential mechanisms underlying this relationship have not been thoroughly revealed. The objective of this study was to examine the underlying mechanisms linking perceived stress to insomnia through testing the mediating effects of emotional dysregulation and time structure. Through a multiple-stage convenience sampling, 511 unemployed young people (38.6% women; mean age = 21.51; SD = 2.22) were measured using the 10-item Perceived Stress Scale (PSS-10), Insomnia Severity Index (ISI), 16-item Difficulties in Emotion Regulation Scale (DERS-16), and Time Structure Questionnaire (TSQ). Based on the statistical description of the sample, chi-squared tests, bivariate correlation analyses, and mediation analyses were performed. The study indicated that 53.0% (95% CI: 48.7–57.4%) of the participants reported probable insomnia, and both insomnia and perceived stress demonstrated strong associations with emotional dysregulation and time structure, which served as partial mediators between perceived stress and insomnia symptoms according to mediation analyses. Path analysis further revealed that, after controlling for age and gender, emotional dysregulation and time structure accounted for 31.8 and 17.6% of the effect of perceived stress on insomnia, respectively. This study provides empirical support for the association among perceived stress, emotional dysregulation, time structure, and insomnia symptoms. To improve the sleep quality and general wellbeing of unemployed young people, emotional dysregulation and time structure must be taken into consideration.