Last year, the number of young people in the city on a job-seeker benefit dropped by 428.
It was an "amazing'' result for a collaborative approach to youth unemployment, John Allen, of the Ministry of Social Development (MSD), says.
The initiative is part of an MSD-led trial bringing together civic, social service, education and business interests to find solutions to youth problems, particularly unemployment.
In 2013, Mr Allen, who is the southern region commissioner for MSD, called on city, government and youth service representatives to work together to stop young people leaving school and going on a benefit.
Mr Allen had previously said 63% of all 18 to 24-year-olds on a benefit south of the Rangitata River lived in Dunedin.
He had shown that the number of unemployed youth in that age group fluctuated between 800 and 1800 depending on how the economy was performing but was not reducing overall.
For the past year, as part of the trial, the multi-sector groups had been working on strategies to stop young people "leaking'' from school and work and ending up not in education, employment or training, Mr Allen said.
In March last year, there were about 1000 Dunedin youth on a job-seeker benefit.
By the end of the year it had decreased by more than 40%.
"We think it is incredibly successful,'' Mr Allen said.
"The minister has been down here to see this model. She's met the people, and has been quite blown away by what's going on.''
