Effectiveness of psychodynamic therapy for adolescents in reducing internalizing and externalizing psychopathology was determined by comparing treated adolescents (86 sessions) with the normative developmental progression in two groups without treatment: healthy and diabetic adolescents. In a three-wave longitudinal study, n = 531 adolescents (n = 303 patients, n = 119 healthy, n = 109 diabetics) and their mothers filled out psychopathology questionnaires (Youth Self-Report and Child Behavior Checklist). Latent growth curve modeling and multilevel modeling were used to analyze and compare within-person symptoms changes across groups. Analyses showed a significant reduction over the course of treatment for internalizing (Cohen’s d = .90–.92) and externalizing (d = .58–.72) symptoms, also when the developmental progression of both control groups was accounted for (d = .48–.76). Mothers reported lower levels than their children in internalizing symptoms (p ≤ .01) while this discrepancy increased over time for treated adolescents (p = .02). Results established the effectiveness of psychodynamic treatment for adolescents both with externalizing and internalizing symptoms in comparison with growth and change in nonclinical samples. Cross-informant differences and age-specific trajectories require attention in psychotherapy treatment and research.