Background: The coronavirus disease 2019 (COVID‐19) pandemic has disrupted healthcare and public health systems, even in Japan’s universal healthcare context, where administrative coordination and voluntary compliance are central to infection control. Difficulties, including delayed health observations and mismatched isolation arrangements, may have shaped individuals’ emotional memories of their illnesses. We aimed to identify the factors associated with distressing memories of COVID‐19 among adults in Japan. Methods: In August 2022, a nationwide cross‐sectional web‐based survey was conducted among 956 adults who experienced COVID‐19 between January 2020 and August 2022. The participants provided information on their demographics, illness characteristics, isolation settings, and post‐COVID sequelae. Distressing illness memories were measured using a six‐item original scale based on cognitive appraisal theory (Cronbach’s α = 0.87). Multiple regression analysis examined the associations between distress scores and demographic, clinical, and contextual variables. Results: On a total score of 6–24 points, higher distress scores were associated with younger age ( B = −0.06 per year, 95% CI −0.08 to −0.04), female sex ( B = 0.48, 0.22–0.75), coresidence with older adults ( B = 0.58, 0.27–0.90), risk factors for severe illness ( B = 1.07, 0.74–1.41), severe acute symptoms ( B = 0.27, 0.003–0.54), current post‐COVID sequelae ( B = 1.37, 0.88–1.87), and nonpreferred isolation setting ( B = 1.17, 0.65–1.69). Conversely, prompt health observation from public health centers or clinics was associated with lower distress ( B = −0.43, −0.80 to −0.06). Conclusions: Distressing memories of COVID‐19 were associated with physical and contextual factors, including timeliness of the initial public health contact, persistent sequelae, and a mismatch between preferred and actual isolation settings. Early and consistent follow‐ups by health authorities, attention to individual isolation preferences, and integrated psychosocial care may help reduce distress and foster recovery during future public health emergencies.