Background <p>Sport is a distinct, structured form of physical activity that can support psychological health and social development in children and adolescents. Compared to other forms of physical activity, the unique attributes of sport, including its combination of physical, cognitive, and social opportunities and challenges within structured goal-directed contexts, may confer additional&#xa0;psychological and social benefits. This systematic review synthesizes evidence on the psychological and social outcomes of sport participation in children and adolescents, and proposes an updated, developmentally informed conceptual model explaining the mechanisms through which sport supports mental health.</p> Methods <p>A systematic search was conducted across five electronic databases on 18 October 2024, with no date limits applied. Eligible studies were peer-reviewed, published in English, and focused on the relationship between sport participation and psychological and/or social outcomes in 5–17-year olds. Sport was defined as a structured form of physical activity performed individually or in teams, with established rules and a specific objective. Risk of bias was assessed using validated tools tailored to study design.</p> Results <p>From 17,017 records, 189 studies were included, spanning cross-sectional, longitudinal, and experimental designs. Sport participation was consistently associated with better mental health—including higher self-esteem, life satisfaction, and reduced depressive and anxiety symptoms—and enhanced social outcomes, such as improved interpersonal skills, prosocial behavior, and belonging. Team sports showed stronger and more consistent benefits than individual sports. The experimental&#xa0;evidence highlighted potential causal effects on emotional regulation, resilience, and prosocial behavior. Risk of bias was generally low among randomized trials, although most relied on self-report data and lacked pre-registration. Observational and quasi-experimental studies were methodologically sound but were affected by potential confounding and social desirability bias.</p> Conclusions <p>This review provides compelling evidence that organized sport participation supports psychological and social development in children and adolescents. Sport was consistently associated with higher self-esteem, greater life satisfaction, and lower symptoms&#xa0;of depression and anxiety, with team sports showing stronger and more consistent benefits than individual sports. Social outcomes—including enhanced belonging, prosocial behavior, and interpersonal skills—were also evident, underscoring the unique contribution of sport as a social context for development. The refined conceptual model proposed here identifies self-perceptions, peer belonging, and social support as central mechanisms, offering a developmentally informed framework for leveraging sport to promote youth mental health. These findings highlight sport, especially inclusive and well-structured team sports, as a powerful setting for fostering psychological well-being and positive&#xa0;social outcomes, warranting prioritization in youth development policies and programs.</p>