The campaign includes posters, TV and online adverts and a music video
A task force of young anti-knife crime campaigners has been set up by the Home Office.
Ministers have also launched a new set of adverts designed to turn young people away from knife crime.
Posters showing youngsters behind bars, with the slogan "carry a knife and lose your life" will be displayed at bus stops across England and Wales.
TV and online adverts will also be used, and a music video is being launched via the Bebo website.
It is the second phase of the It Doesn't Have to Happen campaign, launched last year to reduce knife carrying among 10 to 16-year-olds.
Home Office minister David Hanson said: "The vast majority of young people are honest and law-abiding and won't tolerate violence in their neighbourhood.
"This campaign targets the small minority who break the law. We are sending out a clear message that people who break the law and continue to carry offensive weapons will face tough penalties."
The youth taskforce is a group of young people, aged 15 to 20, from communities affected by knife crime including London, Leeds, Cardiff and Bristol.
The Home Office said the group would be spreading the campaign messages to their peers - in their communities and via the social networking site Bebo.
In addition, two television and online adverts will feature the testimonials of inmates at a young offenders institute serving sentences for knife offences.
The advert will run on youth websites and TV music channels including Kiss, 4 Music and the Box.
And a music video called Don't Shank Just Skank, featuring members of the taskforce and artists including Donaeo, Rollin' G, and DJ Luck and MC Neat, aims to spread the anti-knife message through music and dance.
The track launches exclusively on BBC 1Xtra before being available to download from Bebo on Friday.
The track is based on the dance craze skank and the slang term for knife, shank.
Youth taskforce member, Aron Jervis, from east London, said he had suffered the "traumatic" experience of being stabbed in the past.
"I got involved with 'It Doesn't Have to Happen' because I know that nobody can get through to young people better than other young people."
Pilot, from Rollin' G, said he had also been stabbed in the past.
"It was a totally unprovoked attacked that left me seriously injured and turned my whole life upside down. Carrying a knife can have so many consequences on the victim and their whole network of friends and family.
"We wanted to show that more young people are anti-knife than pro-knife, which is why we've all teamed up on this track."
It Doesn't Have to Happen supports the work of the government's Tackling Knives Action Programme (TKAP) in England and Wales.
Earlier in the summer the Home Office said the number of knife deaths in areas targeted by the scheme had risen.
In nine months, 126 people died after being attacked with a knife or other sharp object - seven more than in the same period the previous year.
Overall knife-related violence fell by 10%, but the number of deaths among teenagers remained unchanged.