BACKGROUND As populations age, psychological distress in late life will become of increasing public health and social importance. This study seeks to bridge the gap in information that exists about psychological distress in late life, by exploring the prevalence of psychological distress among a very large sample of older adults to determine the impact of age and gender, and the modifying effect of these factors on the associations between measures of psychological distress and sociodemographic and comorbid conditions. METHODS We analyzed self-reported data from 236,508 men and women in the New South Wales 45 and Up Study, to determine the impact of age and gender, and the modifying effects of these factors on associations between psychological distress and sociodemographic and comorbid conditions. RESULTS Higher education, married status, and higher income were associated with lower risk of psychological distress. Although overall prevalence of psychological distress is lower at older ages, this increases after age 80, and is particularly associated with physical disabilities. Some older people (such as those requiring help because of disability and those with multiple comorbid health conditions) are at increased risk of psychological distress. CONCLUSIONS These findings have implications for both healthcare providers and policy-makers in identifying and responding to the needs of older people in our aging society.