An Aboriginal child was hauled before the Koori court for stealing a $3 chocolate bar despite it being his first offence.
The Commissioner for Children and Young People is worried there are more Aboriginal youths in the justice system and at a younger age than the general population.
A human rights report tabled in Victoria's parliament on Thursday said a concerning number of Aboriginal children have appeared in court for theft of very low value items.
"Including a child who was before the Court for the theft of a $3 chocolate bar, even though it was his first offence," the report says.
The commissioner is also concerned about the higher rates and length of remand for Aboriginal children.
The Children's Court said it regularly emphasised to police the importance of cautioning young Aboriginal people who come into contact with them.
It also offers first-time offenders the option to adjourn the matter and attend a court-ordered diversion program.
The Ropes Program teams young offenders with a police officer for a day of climbing ropes and mentoring.
If the program is successfully completed, the court may dismiss the charges.
Overall, the number of children found guilty in the Children's Court has dropped 50 per cent since 2009-10.
The 2013-2014 Children's Court annual report released on Thursday showed guilty findings dropped from 6174 to 3778 in five years.
It also showed the number of children in detention fell from 246 to 141.
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