Objective: The aim of the present study was to describe the most common terms used to label mental disorders and examine how label use develops with age, and the factors that may mediate any of these developmental changes. Method: A national telephone survey was conducted with 2802 Australian young people aged 12–25 years and 1528 co-resident parents. Label use was assessed in response to one of three randomly assigned vignettes describing symptoms of depression, psychosis and social phobia. Results: Depression was correctly labelled twice as frequently as psychosis, whereas social phobia was rarely correctly labelled and most commonly labelled using lay terms. Use of accurate labels increased with age and female subjects were more likely to use them. For all vignettes, likelihood of using an accurate label was associated with exposure to mental health community awareness campaigns and accuracy of label used by a parent. Exposure to a family member or friend who had experienced the disorder and sought help was associated with accurate labelling of the depression and psychosis vignettes only. Male gender was more frequently associated with inaccurate label use. Conclusions: Accuracy of labelling by young people varies greatly between disorders. More predictors were found for use of accurate labels compared to almost all other non-diagnostic labels. An understanding of the landscape of labelling of mental disorders and factors that mediate their development can be harnessed to improve the effectiveness of community education initiatives. This in turn has the potential to improve labelling of mental disorders by young people and increase appropriate help-seeking during this crucial onset period.