Despite growing concerns about substantial socio-economic differences between districts in many developed nations, limited attention has been paid to how adolescent mental health may be shaped by district characteristics. A few studies have shown that adolescent mental health is related to contextual factors such as district socio-economic status, neighborhood disorder, and quality of infrastructure. However, prior estimates may be an artifact of unmeasured differences between districts. To address these concerns, we used data from the nationwide Norwegian Ungdata surveys (N = 278,764), conducted across the years 2014 to 2019. We applied three-level hierarchical linear models to examine within-municipality associations between municipal factors and adolescent mental health in the domains of internalizing problems (i.e., depressive symptoms), externalizing problems (i.e., behavioral problems), and well-being (i.e., self-esteem), thereby accounting for all time-invariant municipality-level confounders. Our results showed that municipal-level safety, infrastructure, and youth culture are associated with adolescent mental health problems. Further, cross-level interaction models indicated gender-specific associations, with stronger associations of municipality infrastructure and community belongingness with increased self-esteem and reduced delinquent behaviors among girls than boys. Our findings highlight that municipality-level interventions may be a feasible strategy for adolescent mental health, even in a society characterized by low inequality and high redistribution.