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Objective: To examine the health care costs associated with mental disorders and subthreshold mental disorders within a nationally representative sample of children and adolescents in Australia. Method: Data were derived from the Young Minds Matter Survey (N = 6,310). Mental disorders were classified using the Diagnostic Interview Schedule for Children Version IV. Participant data were linked to administrative data on health care costs. Adjusted generalized linear regression models and two-part models were used to estimate mean differences in costs between those with a mental disorder or subthreshold disorder and those without. Results: Costs associated with health care attendances and medications were higher for children and adolescents with mental disorders and subthreshold mental disorders compared to those without a mental disorder. The additional population health care costs due to mental disorders amounted to AUD$234 million annually in children and adolescents, of which approximately 16% was attributed to out-of-pocket costs. Findings showed that those with subthreshold mental disorders or comorbid mental disorders have substantial additional costs of Medicare-funded medical and pharmaceutical services. Conclusion and implication: Mental disorders in children and adolescents are associated with significant health care costs. Further research is needed to ensure that this population is receiving effective and efficient care. [ABSTRACT FROM AUTHOR]