To assess the impact of the introduction of graphic health warning labels on cigarette packets on adolescents at different smoking uptake stages. School-based surveys conducted in the year prior to (2005) and approximately 6 months after (2006) the introduction of the graphic health warnings. The 2006 survey was conducted after a TV advertising campaign promoting two new health warnings. Secondary schools in greater metropolitan Melbourne, Australia. Students in year levels 8-12: 2432 students in 2005, and 2050 in 2006, participated. Smoking uptake stage, intention to smoke, reported exposure to cigarette packs, knowledge of health effects of smoking, cognitive processing of warning labels and perceptions of cigarette pack image. At baseline, 72% of students had seen cigarette packs in the previous 6 months, while at follow-up 77% had seen packs and 88% of these had seen the new warning labels. Cognitive processing of warning labels increased, with students more frequently reading, attending to, thinking and talking about warning labels at follow-up. Experimental and established smokers thought about quitting and forgoing cigarettes more at follow-up. At follow-up intention to smoke was lower among those students who had talked about the warning labels and had forgone cigarettes. Graphic warning labels on cigarette packs are noticed by the majority of adolescents, increase adolescents' cognitive processing of these messages and have the potential to lower smoking intentions. Our findings suggest that the introduction of graphic warning labels may help to reduce smoking among adolescents.