The article analyses the current trends of interaction between higher education and the labour market, identifies the mechanisms of its functioning in the field of education. The main directions of realization of the model of interaction of Ternopil National Pedagogical University and the labour market are revealed. They are assistance in employment of students and graduates of higher education institution, creation of appropriate conditions for functioning and effective development of youth entrepreneurship; promotion of temporary employment of students in their free time; establishment of social partnership with enterprises, institutions and organizations (employers), etc. It is proved that the most relevant indicator of the interaction between higher education institutions (HEIs) and the labour market is the employment of graduates. It depends on many factors, such as: the quality of training in higher education institutions; improvement of training programs that take into account the prospects of the industry; structure and programmes of training specialists of higher education in the region, the compliance of the programmes with the needs of the labour market; training students' personal qualities demanded by the labour market; adaptation of young professionals to working conditions, development of mentoring, social programs to support them in the workplace; creating conditions for self-realization of youth. The factors that influence the training of a competitive specialist and contribute to the intensification of the interaction of the labour market and higher education are identified. The experience of interaction of Ternopil National Pedagogical University with employers is shared. TNPU has developed a clear mechanism for receiving feedback from the labour market about its graduates. In particular, relations with domestic and international employers are constantly maintained, consultations are held in order to timely review educational programs, to ensure the quality of training in conditions of fierce competition in the labour market. It is proved that the development of new approaches to the effective interaction of higher education and the labour market in modern conditions is the key to successful functioning of the higher education system.