An analysis of government data by the think-tank found that half of expelled pupils have mental health problems compared with just one in 50 of all schoolchildren.
The think-tank noted that 99 per cent of excluded children finish school without five good GCSEs and estimated that more than 60 per cent of UK prisoners were excluded from school.
The IPPR said a lack of specialist mental health support for pupils is creating a downward spiral of underachievement and a new teaching pathway for mental health experts is needed to break the cycle.
The think-tank intends to publish full details of its vision for this new teaching pathway in September.
"Theresa May says she is committed to improving the mental health of young people," said IPPR associate fellow Kiran Gill.
"Addressing the most vulnerable children being thrown out of England's schools is a good place to start. If the government is serious about real action on mental health, there needs to be dedicated funding and thought-through solutions rather than sticking plasters on the symptoms of the problem."
The IPPR's analysis was released to coincide with latest government statistics on school exclusions in England.
The figures show a rise in permanent exclusions from 0.07 per cent of pupils in 2014/15 to 0.08 per cent in 2015/16.
The rise was entirely due to secondary schools since the level of exclusions was unchanged in primary schools and declined in special schools.
The number of fixed-period exclusions also increased, up from 302,975 in 2014/15 to 339,360 in 2015/16. Persistent disruptive behaviour remained the most common reason for permanent exclusions, accounting for 34.6 per cent of all expulsions.
Black Caribbean pupils were more than three times as likely to be permanently excluded than the school population as a whole. Chinese and Asian pupils had the lowest rates of exclusion from school.
A Department for Education spokesperson said: "The rules are clear that exclusion powers should only be used in particular circumstances and decisions to exclude should be lawful, reasonable and fair. Permanent exclusion should only be used as a last resort, in response to a serious breach, or persistent breaches, of the school's behaviour policy."