Concerns about the complexity, fragmentation and inefficiency of Australia’s current youth mental health service systems have led policy makers to seek improvements through a shift to community-based solutions. However, there is little evidence of how communities can make this shift. This paper examines the efforts of one Aboriginal and Torres Strait Islander (hereafter, respectfully, Indigenous) community—Yarrabah in north Queensland—to develop strategies for mental health and wellbeing service system improvements for school-aged youth (5–18 years). The research was co-designed with Yarrabah’s community-controlled health service and explores the perceptions of Yarrabah youth and service providers. Iterative grounded theory methods were used to collect and analyse data from 32 youth aged 11–24 years and 24 service providers. Youth were reluctant to seek help, and did so only if they felt a sense of safety, trust, relationality and consistency with providers. Young people’s four suggestions for improvement were access to (1) information and awareness about mental health; (2) youth facilities, spaces and activities; (3) safe and available points of contact; and (4) support for recovery from mental illness. Service providers highlighted an appetite for youth-guided community change and recommended five improvement strategies: (1) listening to youth, (2) linking with community members, (3) providing wellbeing promotion programs, (4) intervening early, and (5) advocating to address the determinants of youth mental health. Overall, both groups realised a disjunct between youth need and service provision, but a willingness to work together for systems change. This study demonstrates the importance of community-driven efforts that harness both youth and service providers’ perspectives, and suggests a need for ongoing dialogue as the basis for co-designing and implementing improvements to wellbeing supports and mental health services for Indigenous youth.