Mental health is fundamental to an individual’s health and well-being. Mental health disorders affect a substantial portion of the Australian population, with the most vulnerable time in adolescence and young adulthood. Indigenous Australians fare worse than other Australians on almost every measure of physical and mental health. Cross-sectional data from young adults (21–27 years) participating in the Life Course Program, Northern Territory, Australia, is presented. Rates of psychological distress were high in remote and urban residing Indigenous and urban non-Indigenous young adults. This rate was more pronounced in young women, particularly in Indigenous remote and urban residing women. Young adults with high psychological distress also had lower levels of positive well-being, higher perceived stress levels, experienced a higher number of major life events and were at an increased risk of suicidal ideation and/or self-harm. This study supports the need for a continued focus on early screening and treatment at this vulnerable age. The significant association seen between psychological distress and other markers of emotional well-being, particularly risk of suicidal ideation and/or self-harm, highlights the need for a holistic approach to mental health assessment and treatment. A concerted focus on improving the environs of young adults by lowering levels of stress, improving access to adequate housing, educational and employment opportunity, will assist in improving the emotional health of young adults.