Physical literacy (PL) has received increasing attention as a potential gateway to lifelong physical activity (PA) participation. Given the well-established health benefits associated with regular PA engagement, PL may be a critical determinant of health via its impact on PA. Only recently has a conceptual framework based on existing evidence that links PL to various health outcomes been put forth (Cairney et al., 2019). The purpose of this study was to examine whether PL influences mental health indirectly through PA. Data were derived from Wave 8 of the Physical Health and Activity Study Team longitudinal project. Children ages 12 to 14 (N = 874; 467 boys) completed measures to assess physical literacy (motor competence, perceived competence, motivation, enjoyment), PA and psychological distress. Structural equation modeling revealed a good fit for the data, ?2/df = 5.59.; CFI = .964; SRMR = .028; RMSEA = .072. Despite evidence of a significant negative bivariate correlation between PA and psychological distress (r = -.12, p < .001), findings revealed competitive mediation in which the dominance of the direct path (Effect = -.37, p < .001) resulted in an unexpectedly positive indirect effect (Effect = .07, p = .01). Although PL did not indirectly affect psychological distress through PA, Cairney et al.'s framework was partially supported as evidenced by PA acting as a suppressor variable that increased the magnitude of the buffering effect PL confers for psychological distress. Moving forward, public health should consider positioning PL as a foundational component within mental health promotion strategies.