To investigate to what extent differences in prevalence and types of mental health problems between ethnic minority and majority youth can be explained by social disadvantage. Mental health problems were assessed in a sample of 1,278 schoolchildren (55 % Dutch, 32 % Moroccan and 13 % Turkish; mean age: 12.9 + 1.8) using the Strengths and Difficulties Questionnaire self-report and teacher report. Measures of family socioeconomic status, neighbourhood deprivation, perceived discrimination, family structure, repeating a school year, housing stability and neighbourhood urbanization were used as indicators of social disadvantage, based on which a cumulative index was created. Ethnic minority youth had more externalizing and fewer internalizing problems than majority youth. Perceived discrimination and living in an unstable social environment were associated with mental health problems, independent of ethnicity. A dose-response relationship was found between social disadvantage and mental health problems. The adjusted odds ratio for mental health problems was 4.16 (95 % CI 2.49-6.94) for more than four compared with zero indicators of social disadvantage. Social disadvantage was more common in ethnic minority than in majority youth, explaining part of the differences in prevalence of mental health problems. Ethnic minority youth in the Netherlands have a different profile of mental health problems than majority youth. In all ethnic groups, the risk of mental health problems increases with the degree of social disadvantage. The higher prevalence of externalizing problems among ethnic minority youth is explained partly by their disadvantaged social position. The findings suggest that social factors associated with ethnicity are likely to explain mental health problems in ethnic groups.