Background <p>Mental health disorders significantly contribute to the global burden of disease, both as non-communicable diseases (NCDs) and as risk factors for other health conditions. They represent a major public health concern in low- and middle-income countries (LMICs). This study aims to investigate associations between psychological distress, socioeconomic factors, and corruption-related factors among Iranian adults in urban settings using multilevel analysis.</p> Methods <p>This cross-sectional analysis uses data from a survey conducted in 2025 among urban adults across all 31 provinces of Iran, employing a proportional, stratified cluster sampling design with probability proportional to size (PPS). Psychological distress among adults aged 18 years and above was assessed using the 12-item General Health Questionnaire (GHQ-12), with a binary threshold of ≥ 4. Multilevel logistic regression models were used to examine associations between psychological distress and socioeconomic factors, perceived corruption, and experience of paying bribes. Models adjusted for health status and included random effects at the province and county levels. Sensitivity analyses were conducted using alternative GHQ-12 thresholds (≥ 3 and ≥ 5) to assess the robustness of findings to the choice of cut-off.</p> Results <p>The proportion of participants scoring above the GHQ-12 threshold of ≥ 4 for psychological distress was 41.2% (mean = 3.46, SD = 3.54). Psychological distress showed clustering at both province and county levels. In the fully adjusted model, compared with married participants, single (OR = 1.32, 95% CI: 1.21–1.44) and divorced/separated participants (OR = 1.48, 95% CI: 1.26–1.74) reported higher odds of psychological distress, whereas widowed participants (OR = 1.18, 95% CI: 0.96–1.43) showed no statistically significant difference. Higher education (OR = 0.80, 95% CI: 0.72–0.89) and better subjective socioeconomic status (OR = 0.30, 95% CI: 0.25–0.37 for highest vs. lowest category) were associated with lower odds. Compared with unemployment, all employment categories were associated with lower odds of psychological distress (ORs = 0.65–0.70, all <i>p</i> &lt; 0.001). Poorer health status showed a graded association with higher odds of distress (ORs = 1.30–1.70). After adjustment for socioeconomic and health factors, perceived corruption was weakly but positively associated with psychological distress (OR = 1.024, 95% CI: 1.019–1.028), and experience of paying bribes was associated with higher odds of psychological distress (OR = 1.38, 95% CI: 1.27–1.51).</p> Conclusions <p>The findings indicate that participants’ psychological distress is associated with socioeconomic factors, perceived corruption, and experience of paying bribes, with variation across provinces and counties in urban Iran. These results underscore the relevance of socioeconomic disadvantage, corruption-related conditions in public services, and area-level contextual variation as important factors in understanding psychological well-being.</p>