Objectives <p>The study aimed to identify the within-person mediating mechanisms linking state mindfulness to mental health, wellbeing, and compassion.</p> Method <p>Participants (133 college students going through an eight-week mindfulness intervention, and 131 waitlist controls) provided daily measures of predictors (facets of mindfulness), mediators (rumination, cognitive interference, self-compassion, and self-transcendent emotions), and outcomes (mental health, wellbeing, and compassion). One-day lagged within-person mediation models were applied to test for mediation effects.</p> Results <p>We obtained complete or partial mediation for all outcome variables except compassion; cognitive interference was the strongest mediator. Effects of the acceptance facet of mindfulness were mediated through rumination, cognitive interference, and self-compassion; the effects of the monitoring aspect through self-compassion and self-transcendent emotions. Moderation analyses showed that the mindfulness intervention did not modify the strength of existing causal pathways. We also obtained positive correlations between meditation and mindfulness practice and state mindfulness.</p> Conclusions <p>The findings strongly suggest a causal flow of influence, where mindfulness (as enhanced through meditation and informal practices) boosts mental health and wellbeing by reducing rumination and cognitive interference and increasing self-compassion and self-transcendence. Mindfulness thus can free the mind from excessive self-preoccupation, thereby improving mental health and wellbeing.</p> <p><b>Preregistration</b>: This study is not preregistered.</p>