It warns of a "crisis" with more than six million people so disillusioned they have given up looking for work.
The ILO wants governments to make job creation a priority.
It wants more training schemes, and also tax breaks for employers.
"The youth unemployment crisis can be beaten but only if job creation for young people becomes a key priority in policymaking and private sector investment picks up significantly," said Jose Manuel Salazar-Xirinachs, executive director of the ILO's employment sector.
Since 2007, the number of young people without jobs has risen by four million - up from less than 12%, the Global Employment Trends for Youth report says.
Almost 13% of people aged between 15 and 24 - or almost 75 million - have no work, although this is slightly down on its peak in 2009.
In the European Union, one in five young people are looking for work, the report claims.
Some 27.9% of youths were unemployed in North Africa last year following the Arab Spring uprisings - a rise of five percentage points on 2010.
In the Middle East, the figure stood at 26.5% in the report's regional breakdown.
"Even in East Asia, perhaps the most economically dynamic region, the unemployment rate was 2.8 times higher for young people than for adults," the report said.
Detached from society
But, the ILO report reveals, the true picture of youth unemployment is even more pessimistic.
Many young people are extending their time in higher education because they cannot find jobs.
Others are taking part-time unskilled work because they cannot find work in the fields they trained for.
The ILO says that more than six million young people worldwide have given up looking for work and are becomingly increasingly detached from society.
By not using their skills they are losing them, the report says, and if there is no improvement in the jobs market soon, they may be not only unemployed, but unemployable.
The ILO suggests offering tax breaks and other incentives to businesses hiring young people and offering more entrepreneurship programmes to help kick-start careers.