This article assesses the effectiveness of the Scottish model of youth justice in the context of a growing body of international research that is challenging the `evidence base' of policy in many western jurisdictions. Drawing on findings from the Edinburgh Study of Youth Transitions and Crime, it shows how labelling processes within agency working cultures serve to recycle certain categories of children into the youth justice system, whereas other serious offenders escape the tutelage of the formal system altogether. The deeper a child penetrates the formal system, the less likely he or she is to desist from offending. The article concludes that the key to reducing offending lies in minimal intervention and maximum diversion. Although the Scottish system should be better placed than most other western systems at delivering such an agenda (owing to its founding commitment to decriminalization and destigmatization), as currently implemented it appears to be failing many young people.