The report, published today by human rights group ForcesWatch, found younger recruits are significantly more likely than older personnel to suffer post-traumatic stress disorder (PTSD); to drink at levels harmful to health; and to behave violently on their return from war.
And it said young recruits from disadvantaged backgrounds are at greatest risk.
The report, The Last Ambush? Aspects of mental health in the British armed forces, calls for the minimum age of recruitment to be raised to 18.
The report claims to draw on more than 150 sources, including 41 studies investigating the prevalence and risk of six mental health-related problems in the British armed forces such as PTSD, mental disorders such as types of anxiety and depression, harmful drinking, post-deployment violence, self-harm and suicide.
It said 8% of Iraq war veterans who enlisted without school exam qualifications suffered with PTSD after their deployment, compared with 4% in the armed forces as a whole and 3% in the UK population.
The report said 26% of personnel aged 18-24 were drinking at harmful levels - which it said was twice the 13% average for the armed forces and more than three times the 8% rate among civilians of similar age.
Its authors want the minimum age of recruitment by the Ministry of Defence (MoD) to be raised to 18.
Author David Gee said: "When it comes to the trauma of warfare, recruits from the poorest backgrounds face a 'perfect storm' of pre-existing vulnerability and greater battlefield exposure."
An MoD spokesman said: "This report completely ignores the benefits and opportunities that a military career offers young people.
"It provides them challenging and constructive education, training and employment, equipping them with valuable and transferable skills for life."