2010-11: Markus Karlstrom skated in three games for SDE HF's U18 team in Sweden and skated for the club's U16 teams. He played for Stockholm 2 in the TV-Pucken tournament for high school age players. In three U18 games he had 1 assist and 2 penalty minutes. He played eight games for SDE HF's gold medal-winning U16 team and had 1 goal with 2 assists and 4 penalty minutes. In eight games during the TV-Pucken tournament he scored 1 goal with 2 assists and 2 penalty minutes.
2011-12: Karlstrom skated for AIK Stockholm as a 16-year-old in his first full season in Sweden's U18 league. He scored 1 goal with 7 assists in 38 games and was +18 with 20 penalty minutes. AIK missed the U18 Allsvenskan playoffs after finishing eighth in the South Division.
2012-13: Karlstrom appeared in five games for AIK Stockholm's U20 team and displayed an offensive touch in his second season with the club's U18 team. He scored 1 goal and was +4 in his brief time with the AIK U20 team. Karlstrom scored 14 goals with 30 assists in 40 games for AIK's U18 team and was +37 with 38 penalty minutes. AIK finished fourth in the South Division and reached the playoff quarterfinals. Karlstrom had 1 assist and was -1 with 2 penalty minutes in five playoff games. Ranked 76th amongst European skaters in Central Scouting's final rankings, he was selected by Winnipeg in the seventh round (194th overall) in the 2013 NHL Draft.