Diathesis-stress models conceptualise individual differences in propensity for psychopathology as an interaction between environmental risk factors and intra-individual vulnerabilities. In contrast, the differential susceptibility theory and related frameworks view intra-individual differences as variations in sensitivity to the environments rather than merely vulnerability to them. Specifically, they suggest that more sensitive individuals are more affected by the quality of their context, whether positive or negative, than others who are less sensitive. Empirical research over the last two decades has found support for this notion in that greater sensitivity is associated with a greater risk of psychopathology in adverse contexts, but also with lower risk in positive environments. However, despite growing academic and public interest in this field, it is currently unclear to what extent the differential susceptibility model is relevant, or applicable, to clinical practice. The purpose of this review is to focus on the differential susceptibility theory as an alternative explanation of individual differences in mental health and examine its relevance in the treatment of mental health problems in young people. We provide an overview of differential susceptibility and related theories, and current relevant research in the field. We identify potential implications of differential susceptibility models for understanding and treating mental health problems in young people, whilst also highlighting important gaps in research that limit their application at present. Finally, we suggest directions for future research that will assist in the translation of differential susceptibility theories into clinical practice.