BACKGROUND: A greater understanding of the circumstances of first sexual intercourse, as opposed to an exclusive focus on age at occurrence, is required in order that sexual health and well-being can be promoted from the onset of sexual activity. METHODS: We used data from the third National Survey of Sexual Attitudes and Lifestyles (Natsal-3) conducted in Britain. Participants were categorised as 'sexually competent' at first heterosexual intercourse if the following self-reported criteria applied to the event: contraceptive use, autonomy of decision, both partners 'equally willing', and occurrence at the perceived 'right time'. We examined the prevalence of 'sexual competence', and its component parts, by age at first intercourse among 17-24-year-olds. Using multivariable logistic regression, we explored associations between sexual competence and potential explanatory factors. RESULTS: Variation in 'sexual competence' and its component parts was associated with, but not fully explained by, age at first sex: 22.4% and 36.2% of men and women who had first sex at age 13-14 years were categorised as 'sexually competent', rising to 63.7% and 60.4% among those aged ≥18 years at first intercourse. Lack of sexual competence was independently associated with: first intercourse before the age of 16 years, area-level deprivation (men only), lower educational level, black ethnicity (women only), reporting 'friends' as main source of learning about sex (women only), non-'steady' relationship at first sex, and uncertainty of first partner's virginity status. CONCLUSIONS: A substantial proportion of young people in Britain transition into sexual activity under circumstances incompatible with positive sexual health. Social inequalities in sexual health are reflected in the context of first intercourse.