BACKGROUND: Preventing adolescent substance use and youth violence are public health priorities. Positive youth development interventions are widely deployed often with the aim of preventing both. However, the theorised mechanisms by which PYD is intended to reduce substance use and violence are not clear and existing evaluated interventions are under-theorised. Using innovative methods, we systematically searched for and synthesised published theoretical literature describing what is meant by positive youth development and how it might reduce substance use and violence, as part of a broader systematic review examining process and outcomes of PYD interventions. METHODS: We searched 19 electronic databases, review topic websites, and contacted experts between October 2013 and January 2014. We included studies written in English, published since 1985 that reported a theory of change for positive youth development focused on prevention of smoking, alcohol consumption, drug use or violence in out-of-school settings. Studies were independently coded and quality-assessed by two reviewers. RESULTS: We identified 16 studies that met our inclusion criteria. Our synthesis suggests that positive youth development aims to provide youth with affective relationships and diverse experiences which enable their development of intentional self-regulation and multiple positive assets. These in turn buffer against or compensate for involvement in substance use and violence. Existing literature is not clear on how intentional self-regulation is developed and which specific positive assets buffer against substance use or violence. CONCLUSIONS: Our synthesis provides: an example of a rigorous systematic synthesis of theory literature innovatively applying methods of qualitative synthesis to theoretical literature; a clearer understanding of how PYD might reduce substance use and violence to inform future interventions and empirical evaluations.