Previous studies have identified educational differences in early labour market exits, yet the mechanisms behind these disparities remain unclear. This study aims to examine to what extent common mental disorders (CMD) and alcohol-related morbidity can explain educational differences in early labour market exit. This cohort study included all men born 1951-53 who underwent conscription examination for military service in Sweden at age 18-20 (n = 136 466). The highest level of educational attainment and early labour market exit, using five different exit routes, was obtained from nationwide registers. Mediation analysis was used to examine the contribution of CMD and alcohol-related morbidity to the educational differences in early labour market exit. Factors measured in childhood, late adolescence, and early adulthood were included as confounders. Lower-educated men were at higher risk of leaving the labour market early. CMD contributed marginally to the educational differences in early exit due to disability pension, long-term sickness absence, and long-term unemployment, explaining up to 4%. Alcohol-related morbidity explained up to 12% of the educational differences in disability pension, long-term sickness absence, and long-term unemployment. Neither CMD nor alcohol-related morbidity were associated with early old-age retirement with and without income. Alcohol-related morbidity appears to be of importance when trying to understand educational differences in some but not all early labour market exit routes. Thus, reducing the negative effects of alcohol consumption could reduce educational inequalities in early exits from the labour market and prolong working life for all individuals regardless of socioeconomic position.