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Understanding the drivers of student dropout from higher education has been a policy concern for several decades. However, the contributing role of certain factors—including student mental health—remains poorly understood. Furthermore, existing studies linking student mental health and university dropout are limited in both methodology and scope—for example, they often rely on small and/or non-representative samples or subjective measures, and focus almost exclusively on main effects. This paper overcomes many of these shortcomings by leveraging unique linked administrative data on the full population of domestic students commencing undergraduate studies at Australian universities between 2012 and 2015 (n = 652,139). Using these data, we document that approximately 15% of students drop out of university within their first academic year. Critically, students receiving treatment for mental health problems are 4.3 (adjusted) to 8.3 (unadjusted) percentage points more likely to drop out of higher education. This association remains in the presence of an encompassing set of potential confounds, and is remarkably uniform across segments of the student population determined by individual, family, and programme characteristics. Altogether, our findings call for increased policy efforts to improve student mental health and to buffer against its deleterious effects on retention. [ABSTRACT FROM AUTHOR]