Circadian dysregulation and depressed mood commonly co-occur in young people, yet mechanisms linking Delayed Sleep–Wake Phase disorder (DSWPD) with depression are poorly understood. The present study aimed to examine the role of repetitive negative thinking (RNT), by comparing sleep, RNT and depressive symptomology between 40 ‘good’ sleeping young people and 63 with DSWPD, with (n = 30) and without (n = 33) self-reported doctor-diagnosed depression. Secondary analysis from a randomised controlled trial was also undertaken to observe changes in depressive symptoms and RNT as a result of treatment for DSWPD. The 60 young people with DSWPD (mean [SD] age of 15.9 [2.2] years, 63% female) received either short (green) or long (red) wavelength bright light therapy (BLT) over 3 weeks. Cross-sectional baseline comparisons revealed an escalating pattern of worse sleep, more RNT and higher depressed mood scores in the DSWPD young people compared to good sleepers. Across all participants, RNT accounted for the associations between sleep-onset difficulties and depressed mood at baseline. Symptoms of depression, RNT and sleep onset difficulties in DSWPD individuals significantly improved after treatment (d = 0.47–0.65) and at the 1- (d = 0.43–1.00) and 3-month follow-up (d = 0.39–1.38), yet there were no differences between short- and long-wavelength BLT. Results provide preliminary evidence that RNT may link delayed sleep phase with depression. BLT conferred sleep benefits, but also improvements in depressed mood and RNT, and thus represents a potentially cost-effective strategy for young people experiencing delayed sleep phase and low mood.