The study concerned possible mediators and moderators in the relationship between unemployment and psychological distress. The sample consisted of 58 unemployed and 177 employed 36-year-old Finnish people drawn from the ongoing Jyväskylä Longitudinal Study of Personality and Social Development. Data were gathered by means of a mailed questionnaire, a semistructured interview, and personality inventories. The results showed that poor economic situation, and poor self-esteem as measured by Rosenberg's Self-Esteem Scale, mediated the relationship between unemployment and psychological distress even after controlling for the prior level of self-esteem. Psychological distress was defined as psychological ill-health (the General Health Questionnaire), depressive symptoms (the General Behavior Inventory), and anxiety (the Karolinska Scales of Personality). However, support was also found for an alternative model, in which depressive symptoms functioned as a mediator between long unemployment and poor self-esteem, suggesting that individuals may react to unemployment in different ways.