This study examined the mediating role of negative stress in the relationship between Psychological Capital (PsyCap) a higher-order construct comprising hope, self-efficacy, resilience, and optimism and psychological distress indicators among Ecuadorian uni-versity students. A cross-sectional survey was conducted with 1,732 students (55% women; M = 20.44, SD = 2.29), using validated self-report measures. Structural equa-tion modeling showed a good model fit (CFI = 0.947; TLI = 0.942; RMSEA = 0.055; SRMR = 0.040) Results indicated that PsyCap was negatively associated with negative stress (β = −0.261), which in turn showed strong positive effects on anxiety–depression symptoms (β = 0.782) and psychological inflexibility (β = 0.781). Direct effects of PsyCap on both outcomes were significant but comparatively small (β = −0.115 and β = −0.086, respec-tively), whereas indirect effects through stress were substantial and significant (β = −0.204), supporting a partial mediation model. The model explained 67.2% of the vari-ance in anxiety–depression and 65.2% in psychological inflexibility. These findings suggest that PsyCap operates primarily as a protective factor through its capacity to reduce negative stress, which subsequently influences downstream psy-chological outcomes. The results highlight the importance of stress-focused mecha-nisms in understanding how positive psychological resources impact mental health. From an applied perspective, the findings underscore the relevance of implementing strengths-based interventions in higher education that enhance PsyCap components while simultaneously targeting stress reduction. Such inter-ventions may contribute to decreasing psychological distress and improving students’ adaptive functioning and well-being. This study provides robust evidence from the Latin American context, advancing the understanding of transdiagnostic mechanisms linking positive resources and mental health in university populations.