The transition to adulthood is characterised by both great potential for positive change and a relatively high incidence of problem outcomes. A multidimensional model of positive development during the transition to adulthood (at 19-20 years) has recently been proposed. However, an unresolved question regarding the nature of positive development during this time is how best to conceptualise its relationship to psychopathology. We drew on data from 1158 participants in the Australian Temperament Project, a large longitudinal community-based study that has followed young people's psychosocial adjustment from infancy to early adulthood. Using structural equation modelling, we compared three models reflecting different conceptualisations of the relationship between positive development and psychopathology. The results suggest that positive development and psychopathology are best modelled as separate but correlated constructs. Hence, development in one domain is likely to influence the other, although separate and specific developmental pathways are also likely to be operating.