BACKGROUND Internal displacement has been a distressing issue of Pakistan for last one decade. Few research works have been conducted on the psychological issues of internally displaced persons in Pakistan. OBJECTIVE The current research was aimed at determining the psychological effects of internal displacement, that is, psychological well-being, depression, anxiety and stress (internalizing problems) of the individuals who were displaced as a result of an armed conflict in Swat. METHODS A sample of 126 internally displaced persons was taken from Jalozai camp which included females (n = 65) and males (n = 61). Age of the sample ranged from 20 to 75 years with a mean of 47.5 years. Translated and adapted versions of Well-Being Affectometer-2 Scale and Depression Anxiety Stress Scale were used in the current research. RESULTS Results of the study indicated differences between males and females, females being higher on internalizing problems and lower on psychological well-being, whereas family loss during displacement affected the results in the same way. Well-being, gender and family loss emerged as significant predictors of internalizing problems, and gender moderated the relationship between well-being and internalizing problems. CONCLUSIONS Internal displacement may bring psychological issues for internally displaced persons, that is, their well-being may decrease and depression, anxiety and stress may increase during displacement. Limitations and implications of the study were discussed further.