Background: Depression, anxiety, and stress related to diabetes create psychosocial distress. In Mongolia, although the prevalence of diabetes has been rapidly increasing in recent years, studies on psychosocial and mental health–related clinical factors among people with diabetes are limited. To study some psychosocial and mental health–related changes occurring in people with diabetes in relation to disease complications and control indicators. Materials and Methods: The study was conducted using an analytical cross-sectional design, including 172 adults with diabetes. Standard assessment tools such as the Patient Health Questionnaire-9, Generalized Anxiety Disorder-7, and Diabetes Distress Scale questionnaires were used to collect data. Cases that tested positive on two or more instruments were defined as having “composite psychosocial distress.” Univariate and multivariate logistic regression analyses were performed to identify factors associated with composite psychosocial distress, and additional statistical models were developed for each outcome. Result: The mean age of participants was 58.3±10.4 years, and 57.6% were female. The mean HbA1c value was 9.0% (IQR 7.5–11.0), and the average duration of diabetes was 10 years (IQR 6–16). Among all participants, 16.9% had composite psychosocial distress. One chronic complication related to diabetes was observed in 47.7% of participants, while 17.0% had two or more complications. Scores of depression, anxiety, and diabetes-related distress were positively correlated (all p<0.001). In univariate analysis, with each additional chronic complication, composite psychosocial distress increased (OR=1.93, 95% CI 1.31–2.87; p=0.001). In univariate regression analysis, higher HbA1c significantly increased the risk of composite psychosocial distress (for each 1% increase, OR=1.14, 95% CI 1.01–1.28; p=0.040). In multivariate analysis including number of chronic complications and HbA1c, the number of chronic complications remained an independent factor increasing risk (adjusted OR=1.92, 95% CI 1.21–3.05; p=0.005), while HbA1c was not statistically significant. The prevalence of composite psychosocial distress tended to increase depending on complications. Among participants without chronic complications, it was 8.9%; among those with one complication, 19.2%; and among those with two or more complications, 37.9%. The prevalence of moderate to severe depression, anxiety, and high levels of diabetes-related distress also increased similarly with the number of chronic complications. Conclusion Composite psychosocial distress is present in 1 out of every 6 adults with diabetes. The presence of chronic complications increases the risk of composite psychosocial distress by 3.5 times.