Background: Given the high prevalence and negative impact of psychological problems during adolescence, examining transdiagnostic factors that may have scope to positively influence a variety of psychological problems is imperative. The main purpose of this study was to investigate the longitudinal relationship between rumination and psychological distress and whether sleep mediated this relationship over a 2 year period. Methods: Participants were 1620 high school students in the 7th and 8th grade at baseline from 17 public schools in three middle Sweden communities. Students completed questionnaires at school during the spring of 2014, 2015 and 2016. Rumination and psychological distress were self-reported, and sleep duration was calculated from reported bed-times, wake-times and sleep onset latencies. Results: Sleep duration declined with age, whereas rumination and psychological distress increased. Rumination was predictive of future psychological distress and distress at a given time was predictive of concurrent rumination. Sleep duration did not consistently mediate the reciprocal relationships between rumination and psychological distress over time. Limitations: Stronger longitudinal associations may have been obtained by using smaller measurement intervals or further delineation of outcome constructs. Conclusions: Reducing rumination, rather than targeting sleep patterns, may work towards preventing the development of a number of psychological problems and is a strategy anticipated to function across disorders to improve young people's mental wellbeing.