Background Use of illicit drugs, particularly cannabis, by young people is widespread and is associated with several types of psychological and social harm. These relations might not be causal. Causal relations would suggest that recreational drug use is a substantial public health problem. Non-causal relations would suggest that harm-reduction policy based on prevention of drug use is unlikely to produce improvements in public health. Cross-sectional evidence cannot clarify questions of causality; longitudinal or interventional evidence is needed. Past reviews have generally been non-systematic, have often included cross-sectional data, and have underappreciated the extent of methodological problems associated with interpretation. Methods We did a systematic review of general population longitudinal studies reporting associations between illicit drug use by young people and psychosocial harm. Findings We identified 48 relevant studies, of which 16 were of higher quality and provided the most robust evidence. Fairly consistent associations were noted between cannabis use and both lower educational attainment and increased reported use of other illicit drugs. Less consistent associations were noted between cannabis use and both psychological health problems and problematic behaviour. All these associations seemed to be explicable in terms of non-causal mechanisms. Interpretation Available evidence does not strongly support an important causal relation between cannabis use by young people and psychosocial harm, but cannot exclude the possibility that such a relation exists. The lack of evidence of robust causal relations prevents the attribution of public health detriments to illicit drug use. In view of the extent of illicit drug use, better evidence is needed.