The package would work across schools, the online environment, in families and communities and in the health system.
Components included $18.6 million over the next four years to put more nurses, and specially trained youth workers, into low decile secondary schools across the country and a further $12 million to expand the Positive Behaviour School-Wide programme into all secondary schools.
Furthermore, government agencies were to overhaul the mental health-related resources they produced to ensure they were "youth-friendly and technologically up to date"
That will include investigation of technology, such as Facebook and online pop-ups, to reach young people and $2.7 million investment to provide E-therapy specifically tailored for young people.
E-therapy is computer-administered therapy which can be carried out at home.
"It has been shown to be an effective treatment option and it offers real potential to reach isolated young people with mental health issues."
The Government would also set up a new Social Media Innovations Fund to support providers of youth services to better use social media to help young people with mental health problems.
Mr Key also announced an additional $11.3 million for the primary mental health care budget and an expansion of the group that money could be used for.
"That means more young people will benefit."
Meanwhile, in recognition of the role families could play in helping mentally ill young people, Mr Key said a new Whanau Ora initiative would be tested.
"Maori and Pacific youth have higher rates of mental illness and the services available aren't always working well for these groups. So we are going to try something new."
Two Whanau Ora providers with mental health expertise will be contracted to work intensively with 40 Maori and Pacific 12-19 year olds and their whanau or aiga over a two-year period.
"By doing this, we can see whether Whanau Ora's focus on a whole family rather than an individual delivers better results for Maori and Pacific kids with mental illness."
Mr Key said the package built on existing programmes and would try new approaches.
"It addresses gaps in the system and modernises the way we reach young people. It increases funding for youth mental illness and tackles the problem on a wide variety of fronts. Most of all, it sends a strong message to young New Zealanders: We value you and we will help you to succeed."