Globally, 75% of depressive, bipolar, and psychotic disorders emerge by age 25 years. However, these disorders are often preceded by non-specific symptoms or attenuated clinical syndromes. Difficulties in determining optimal treatment interventions for these emerging mental disorders, and uncertainties about accounting for co-occurring psychopathology and illness trajectories, have led many youth mental health services to adopt transdiagnostic clinical staging frameworks. In this Health Policy paper, an international working group highlights ongoing challenges in applying transdiagnostic staging frameworks in clinical research and practice, and proposes refinements to the transdiagnostic model to enhance its reliability, consistent recording, and clinical utility. We introduce the concept of within-stage heterogeneity and describe the advantages of defining stage in terms of clinical psychopathology and stage modifiers. Using examples from medicine, we discuss the utility of categorising stage modifiers into factors associated with progression (ie, potential predictors of stage transition) and extension (ie, factors associated with the current presentation that add complexity to treatment selection). Lastly, we suggest how it is possible to revise the currently used transdiagnostic staging approach to incorporate these key concepts, and how the revised framework could be applied in clinical and research practice.