The Youth Koori Court was opened in Dubbo on Friday, a key program aimed at meeting Closing the Gap targets of reducing the overrepresentation of Aboriginal and Torres Strait Islander young people in the criminal justice system.

NSW Attorney General Michael Daley attended to launch the $5.8 million project.

The state government said investment will ensure the local Aboriginal community is involved in the judicial process, and that young people are connected with services that help address risk factors contributing to offending while also connecting them with family, culture and community.

Aboriginal community leaders and other justice experts have long advocated Indigenous leadership as the key to tackling the underlying causes of youth crime.

The Youth Koori Court has the same powers as the Children's Court but involves Elders and Respected Members of the local Aboriginal community in the court process. It is for Aboriginal and Torres Strait Islander young people who have pleaded guilty to an offence, or who have been found by the Children's Court to have committed a criminal offence, and who choose to participate.

The state government said the Youth Koori Court, which is already operating at Surry Hills and Parramatta, "empowers Aboriginal young people to improve their long-term prospects in a culturally safe and respectful environment".

In a Youth Koori Court Conference, a Children's Magistrate will help the young person and community members devise an Action and Support Plan. This could include ways to strengthen cultural connections, stay at school or gain work, attain stable housing and address any health, drug or alcohol issues.

A young person then has up to 12 months to complete their Action and Support Plan, returning to the Youth Koori Court periodically so the Magistrate can monitor their progress.

Research by the Bureau of Crime Statistics and Research in 2022 found participation in the Youth Koori Court reduced a young person's risk of imprisonment.

The initial funding for the project will be spent over four years towards the operation of the Youth Koori Court at Dubbo, with ongoing funding of $1.5 million a year. It will initially sit twice a month.

NSW Attorney General Michael Daley said it was "an honour to be here today as the Dubbo community and the Children's Court start this vital work together".

"We want to reduce rates of incarceration and see Aboriginal young people move forward into big, fulfilling lives. The NSW government wants to see young Aboriginal people thrive, and this is why we've invested in the Dubbo Youth Koori Court. We believe in this community and believe the Youth Koori Court will be a success," he said.

"Helping young people come up with a supportive plan, work through it with their community, and thereby reduce their likelihood of reoffending, is crucial.

"I thank everyone here today for their work with the Youth Koori Court and look forward to hearing about your progress."

Aboriginal Legal Service NSW/ACT Associate Principal Solicitor (Criminal Practice), Shaun Mortimer, told National Indigenous Times that the ALS welcomed the expansion of the Youth Koori Court to Dubbo.

"The YKC provides an alternative pathway for Aboriginal children who come before the criminal justice system, providing a tailored approach to sentencing, focused on long term diversion away from the criminal justice system and rehabilitation, which are critical in working towards the Closing the Gap targets," he said.

"The ALS looks forward to participating in the expanded YKC scheme at Dubbo and hopes that the YKC will continue to be expanded to other areas of NSW in the future."