BACKGROUND Earlier studies have shown that people with low level of education have increased rates of mental health problems. The aim of the present study is to investigate the association between level of education and psychological distress, and to explore to which extent the association is mediated by sense of mastery, and social variables like social support, negative life events, household income, employment and marital status. METHODS The data for the study were obtained from the Level of Living Survey conducted by Statistics Norway in 2002. Data on psychological distress and psychosocial variables were gathered by a self-administered questionnaire, whereas socio-demographic data were based on register statistics. Psychological distress was measured by Hopkins Symptom Checklist 25 items. RESULTS There was a significant association between low level of education and psychological distress in both genders, the association being strongest in women aged 55-67 years. Low level of education was also significantly associated with low sense of mastery, low social support, many negative life events (only in men), low household income and unemployment,. Sense of mastery emerged as a strong mediating variable between level of education and psychological distress, whereas the other variables played a minor role when adjusting for sense of mastery. CONCLUSIONS Low sense of mastery seems to account for much of the association between low educational level and psychological distress, and should be an important target in mental health promotion for groups with low level of education.