Decentering is a ubiquitous therapeutic concept featuring in multiple schools of psychological intervention and science. It describes an ability to notice to day-to-day psychological stressors (negative thoughts, feelings, and memories) from an objective self-perspective and without perseverating on the themes they represent. Thus, decentering dampens the impact and distress associated with psychological stressors that can otherwise increase mental ill health in vulnerable individuals. Importantly, the strengthening of decentering-related abilities has been flagged as a core component of psychological interventions that treat and prevent anxiety and depression. We provide an in-depth review evidence of the salutary effects of decentering with a special focus on youth mental health. This is because adolescence is a critical window for the development of psychopathology but is often under-represented in this research line. A narrative synthesis is presented that integrates and summarizes findings on a range of decentering-related abilities. Section 1 reviews extant conceptualizations of decentering and data-driven approaches to characterize its characteristic. A novel definition is then offered to guide future empirical research. Section 2 overviews laboratory-based research into the development of decentering as well as its relationship with anxiety and depression. Section 3 examines the role decentering-related skills play in psychological interventions for anxiety and depression. Critically, we review evidence that treatment-related increases in decentering predict latter reductions in anxiety and depression severity. Each section highlights important areas for future research. The report concludes by addressing the vital questions of whether, how, why and when decentering alleviates youth anxiety and depression.