Using longitudinal data from the Edinburgh Study of Youth Transitions and Crime and findings from qualitative interviews, it was found that the Children's Hearings system, in relation to young people referred on offending grounds, had no significant effect on the levels of self-reported offending in those referred to the Children's Hearings system, compared with a matched sample who had no contact with the system. In addition, no differences were found between a smaller matched sample who were placed on a Supervision Requirement and those with no contact with the system. The interventions provided within Supervision Requirements are argued to be ineffective and do not reflect the contemporary literature on effective practice. Interactions with the Children's Hearings system were not found to support labelling or deterrence theories. However, the gatekeeping practices of the police appeared to be biased and labelling in effect. The diversionary approach of the Children's Hearings system was supported through the finding that the majority of cohort members desisted from offending without requiring formal measures. It is argued that the functioning of the system could be improved by diverting more young people with offending behaviours prior to their referral to the Reporter (on the basis of their low risk and low levels of criminogenic needs). The small number of high risk offenders with high levels of criminogenic needs, who are unlikely to desist naturally, should receive structured interventions that reflect current findings in relation to effective practice.