As many as three quarters of a million young people in the UK may feel that they have nothing to live for, a study for the Prince's Trust charity claims.
The trust says almost a third of long-term unemployed young people have contemplated taking their own lives.
Urgent action must be taken to prevent the young jobless becoming the young hopeless, it says.
The government commented that it was doing "everything possible" to help young people find work.
Last month, figures from the Office for National Statistics showed the UK unemployment rate had fallen to its lowest level since 2009, with the number of people out of work falling by 99,000 to 2.39 million in the three months to October.
'Devastating'
The Prince's Trust Macquarie Youth Index was based on interviews with 2,161 16 to 25-year-olds. Of these, 281 were classified as Neet (not in employment, education or training) and 166 of these Neets had been unemployed for over six months.
The report found 9% of all respondents agreed with the statement: "I have nothing to live for" and said if 9% of all youngsters felt the same, it would equate to some 751,230 young people feeling they had nothing to live for.
Among those respondents classified as Neet, the percentage of those agreeing with the statement rose to 21%.
The research found that long-term unemployed young people were more than twice as likely as their peers to have been prescribed anti-depressants.
One in three (32%) had contemplated suicide, while one in four (24%) had self-harmed.
The report found 40% of jobless young people had faced symptoms of mental illness, including suicidal thoughts, feelings of self-loathing and panic attacks, as a direct result of unemployment.
Three quarters of long-term unemployed young people (72%) did not have someone to confide in, the study found.
Martina Milburn, chief executive of the Prince's Trust, said: "Unemployment is proven to cause devastating, long-lasting mental health problems among young people.
"Thousands wake up every day believing that life isn't worth living, after struggling for years in the dole queue.
"More than 440,000 young people are facing long-term unemployment, and it is these young people that urgently need our help.
"If we fail to act, there is a real danger that these young people will become hopeless, as well as jobless."
Wage incentives
A spokesman for the Department for Work and Pension said the government was "doing everything possible" to help young people into work and that there were currently 106,000 fewer young people claiming Jobseeker's Allowance than there were in 2010.
"Through the youth contract, we've hugely increased the number of work experience placements and apprenticeships to give young people the support they need to find a job," the spokesman said.
"By offering employers wage incentives worth up to £2,275 we are helping businesses to take them on.
"The work programme has also helped more than 74,000 young people escape long-term unemployment and find lasting work."
The Prince's Trust was set up by Prince Charles in 1976 to help disadvantaged young people.
It supports 13 to 30 year-olds who are unemployed and those struggling at school and at risk of exclusion.
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