The aim of this study was to assess the prevalence, associated factors, coping mechanisms, and lived experiences of psychosocial distress among internally displaced persons (IDPs) living in Debre Tabor City, Ethiopia. Specifically, the study sought to determine the prevalence of depression, anxiety, stress, and post-traumatic stress disorder (PTSD); identify factors associated with psychosocial distress; examine coping mechanisms employed by IDPs; and explore their lived experiences. To achieve these objectives, a convergent parallel mixed-methods design was employed. Quantitative data were collected from 383 internally displaced persons selected through systematic random sampling using the Depression, Anxiety, and Stress Scale (DASS-21), the Primary Care PTSD Screen for DSM-5 (PC-PTSD-5), the Oslo Social Support Scale (OSLO-3), the Brief COPE-28, and adapted measures of economic hardship and traumatic exposure, while qualitative data were gathered through key informant interviews and focus group discussions. The quantitative data were analyzed using descriptive statistics and binary logistic regression, whereas the qualitative data were analyzed through thematic analysis. The findings revealed a high prevalence of psychosocial distress among IDPs, with depression, anxiety, stress, and PTSD being common mental health concerns. Maladaptive coping strategies, economic hardship, female sex, older age, lower educational attainment, and greater traumatic exposure were identified as significant factors associated with psychosocial distress, while social support demonstrated a protective effect. Furthermore, the qualitative findings highlighted social isolation and stigma as major lived experiences of displacement and generally supported the quantitative results. The study concludes that psychosocial distress represents a serious public health concern among internally displaced persons in Debre Tabor City. Therefore, government bodies and humanitarian organizations shall implement integrated mental health and economic support programs, strengthen community-based social support networks, reduce stigma and social exclusion, and promote adaptive coping strategies to improve the psychological well-being of displaced populations.