Much more work needs to be done to improve relations between the two sectors. And it suggests schools should be more active in singling out pupils at risk of expulsion and placing them on pastoral support programmes.
The guidance, a joint effort by the Children's Services Network (representing local government), the Youth Justice Board (YJB) and the Assembly government, claims the less contact a pupil has with school the more likely it is he or she will turn to crime.
Jane Davidson, minister for education, lifelong learning and skills, said:
"There is much evidence telling us how important education is in keeping children and young people from crime."
However, teacher unions say there is a lack of feedback from external agencies in some local authority areas, with many schools being kept in the dark about individual pupils.
Figures from the YJB for England and Wales show that 15 per cent of school-age prisoners were excluded from school, with 27 per cent receiving fixed-term exclusions within the previous year.
Almost half of the 150,000 children and young people entering the justice system every year in England and Wales are below statutory school age.
The guidelines contain ideas for improving relations between the sectors, including the wider use of restorative justice schemes in schools. Rhondda Cynon Taf was singled out for praise in this area.
Staff from its youth offending team work with staff and pupils to avoid truancy and bullying.
'Youth Justice and schools in Wales: an introductory guide for those working with children and young people', by Graham Robb and Robert Newman