Justice secretary Michael Matheson said increased emphasis would be placed on crime prevention as figures showed the number of under 18s in custody has reduced by 70 per cent since 2007.
Diversion from prosecution is likely to form a key part of the new strategy, which aims to help young people from entering a life of crime.
Figures from the Scottish Government show 662 teenagers aged 16 and 17 were diverted from prosecution in 2013-14 compared to just 40 five years earlier. More than 300 young people aged between 18 and 20 were diverted, compared with 12 in 2008-9.
In a report published yesterday, Preventing Offending: Getting it Right for Children and Young People, the government said there would continue to be a “presumption in favour” of diversion.
It is also continuing to look at raising the age of criminal responsibility, currently eight years, although children cannot be prosecuted until they are 12.
Mr Matheson said: “We have already seen dramatic and positive changes in youth justice since our decisive shift towards prevention in 2008 and on a recent visit to Polmont Young Offenders Institution I was extremely encouraged to learn that the population there has more than halved since 2007.
“The number of under 18s in custody has reduced by 70 per cent, there has been an 83 per cent reduction in the number of children referred to the Children’s Hearings system on offence grounds and there has been a 74 per cent reduction in children appearing in court over the last seven years.
“I’ve seen various justice policies over the years labelled ‘tough’ or ‘soft’ but I think the time is right to move away from those kinds of descriptions. What we are doing in Scotland today – and will continue to do – is adopting ‘smart’ approaches, based firmly on evidence.
“If we are to stop young people going down the wrong path in life and into a life of crime we need to be smart in our response – ensuring timely, appropriate and effective interventions so that we can address offending behaviour at the outset and keep our communities and children safe from crime.”
Diversion schemes are used when it is believed a prosecution is not in the public interest.
The Lord Advocate, Frank Mulholland QC, said: “As Scotland’s prosecution service, we are committed to the prosecution of crime when appropriate and recognise the impact that involvement in the criminal justice system can have on young people.
“We will make the best use of alternatives to prosecution to ensure that young people are treated with dignity and respect whether they are accused of crime or are victims or witnesses of crime.”
Susan McVie, of the Scottish Centre for Crime and Justice Research added: “We very much welcome the commitment in the new strategy to advancing the whole-system approach as a means of both preventing the unnecessary use of formal measures, and for ensuring that young people in Scotland receive timely and appropriate interventions that aim to keep them away from formal criminal justice processes.”