The leadership of North Lanarkshire Council said Youth Court cash had allowed it to reduce youth offending from 35% above the Scottish average to 15% below. At the same time, the council said the numbers of under-18s going through the courts had dropped by more than 60% from their peak in 2007.
But with the funding, currently just over £700,000-a-year, due to come to a halt by 2016, the Labour-administration on the council has accused SNP government ministers of being short-sighted.
Jim McCabe, a regular critic of the Government's approach with local authorities, said the decision to end funding to the service was another blow to grassroots work carried out by councils.
But the Scottish Government said the most recent review of the Youth Courts found "little evidence of reductions in reconviction rates, improvements in outcomes for young people, or value for money for the Scottish Government or other agencies as a result of the Youth Courts".
It also said youth offending was down overall, reducing the need for the specialist courts, which it said were sitting less frequently and no longer represented value for money.
Mr McCabe said: "This is a disgraceful decision on the part of the Scottish Government to withdraw the funding for Youth Courts. Since the funding began, we have been able to reduce youth offending from 35% above the Scottish average to 15% below it.
"This is a remarkable achievement but all that work is in real danger of being lost because of this short-sighted decision. Numbers of under-18s going through the courts have dropped by more than 60% from their peak and that's a real success story. Once again we have a government seemingly intent on getting rid of anything that people in our communities really care about and refusing to listen to local knowledge and experience."
The Youth Court has been operating in Lanarkshire since 2003 and is a central plank in the local youth justice services.
According to the local authority, the cash has allowed an increase in services available to young people who have been caught up in offending.
The scheme sees specialist social workers in six localities across the area, Airdrie, Bellshill, Coatbridge, Cumbernauld, Motherwell and Wishaw, managing cases and supervision, which the authority says "has allowed for more in depth assessment of young people going through the Youth Courts and has built a strong relationship with the courts to ensure that we are in the best possible position to influence court decision-making".
A Government spokesman said: "Our approach to tackling reoffending is working and reoffending frequency among the under-21 age group is down by 37% since 1997-98. There is a greater emphasis on diverting young people away from statutory measures, prosecution and custody."