Health Minister Doug Currie says the plan includes opening a 12-bed youth recovery centre in Summerside next spring.
The recovery centre will offer up to 18 weeks of around-the-clock residential care, up from the eight-week day treatment program currently offered in Charlottetown.
The government says it will also open a dedicated mental health unit for youth in Charlottetown and boost the number of inpatient beds to as many as 12 from four.
A behavioural support team will also be created to work with young people dealing with behavioural conditions and their families.
Currie says the government is responding to recommendations made this year by Dr. Rhonda Matters, the province's chief mental health and addictions officer.