Background The high level of care needs for adolescents with mental health conditions represents a challenge to the public sector, especially in low and middle-income countries. We estimated the costs to the public purse of health, education, criminal justice and social care service use associated with psychiatric conditions among adolescents in Brazil; and examined whether the trajectory of psychopathology and its impact on daily life, and parental stigma towards mental illness, was associated with service utilisation and costs. Methods Data on reported service use among adolescents from a prospective community cohort (n = 1,400) were combined with Brazilian unit costs. Logistic regression and generalised linear models were used to examine factors associated with service use and associated costs, respectively. Results Twenty-two percent of those who presented with a psychiatric disorder used some type of service for their mental health in the previous twelve months. Higher odds of service use were associated with having a diagnosed mental disorder (either incident, [OR = 2.49, 95%CI = 1.44–4.30, p = 0.001], remittent [OR = 2.16, 95%CI = 1.27–3.69, p = 0.005] or persistent [OR = 3.01, 95%CI = 1.69–5.36, p<0.001]), higher impact of symptoms on adolescent’s life (OR = 1.32, 95%CI = 1.19–1.47, p<0.001) and lower parental stigma toward mental illness (OR = 1.12, 95%CI = 1.05–1.20, p = 0.001). Average annual cost of service use was 527.14 USD (s.d. = 908.10). Higher cost was associated with higher disorder impact (β = 0.25, 95%CI = 0.12–0.39, p<0.001), lower parental stigma (β = 0.12, 95%CI = 0.02–0.23, p = 0.020) and white ethnicity (β = 0.55, 95%CI = 0.04–1.07, p = 0.036). Conclusion The impact of mental health problems on adolescents’ daily lives and parental stigmatising attitudes toward mental illness were the main predictors of both service use and costs.